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Accounting for crypto assets
Written on Jun 12, 2019
The profession is still grappling with how to categorize cryptocurrency.
“Accounting for cryptocurrencies is certainly unique,” writes Chris DeMayo, CPA in the May/June issue of CPA Voice. “It’s hard to pinpoint any good analogies to lean on when thinking through an approach to accounting.”
DeMayo goes on to write that cryptocurrencies manage to fail a lot of accounting tests when it comes to cash, being classified as a financial instrument and inventory.
“The analysis leaves us with one place to go: intangible assets win the day,” he says. “The only problem is that intangible assets are generally carried at cost and evaluated for impairment (with no opportunity to write up assets if they increase in value). This leaves accountants with the unsavory conclusion that a highly volatile asset, which has a readily assessable fair value in an open market place, is, at best, frozen in time in the financials.”
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