FASB made several tentative board decisions Wednesday related to its project on the disclosure of crypto assets, and the board agreed to create an exposure draft for a related Accounting Standards Update.
At the AICPA & CIMA Conference on Current SEC and PCAOB Developments earlier in the week, FASB staff said that if the board decided to proceed with an exposure draft related to the project, it would aim to do so during the first half of 2023.
At Wednesday’s meeting, FASB decided that entities — both public and private — that hold crypto assets within the scope of the project would be required to:
- At a minimum, present the aggregate amount of crypto assets separately from other intangible assets that are measured using other measurement bases.
- Present gains and losses on crypto assets in net income and present those gains and losses separately from the income statement effects of other intangible assets, such as amortization or impairments.
- Classify crypto assets received as noncash consideration during the ordinary course of business that is converted nearly immediately into cash as operating cash flows.
FASB also decided that investment companies should present their financial statements in accordance with the presentation requirements in FASB ASC Topic 946, Financial Services — Investment Companies, and not-for-profit entities in accordance with the presentation requirements in Topic 958, Not-for-Profit Entities.
The board affirmed that disclosures in Topic 820, Fair Value Measurement, would be required for crypto assets within the scope of this project. Those disclosures would be required in annual and interim periods.
FASB also decided to require an entity to disclose the following:
- At both annual and interim periods, the following information about each significant crypto asset holding (as determined by the fair value of that holding): the name of the crypto asset, fair value, units held, and cost basis.
- At both annual and interim periods, the fair value and cost basis of other crypto asset holdings may be aggregated into a single line item.
- At annual periods, a reconciliation of activity between the beginning and end of the period for total crypto asset holdings. This disclosure would require that an entity disaggregate information by additions, dispositions, gains, and losses during the period and include a description of the additions and dispositions.
- At annual periods, for the disposition of crypto assets during the period, the difference between the sale price and the cost basis of those assets.
- At both interim and annual periods, the fair value of the crypto assets that are restricted from sale, the nature and remaining duration of the restriction, and the circumstances that could cause a lapse in the restriction(s).