MicroStrategy, the largest public holder of bitcoinhe have joined development list of Support supporters suggested rule changes by financial Account basics board (FASB), which seeks to eliminate impairment charges for Cryptocurrency holding companies.
like of On March 31, MicroStrategy held nearly 140,000 BTC, giving it a high profile. in encryption market.
Definition of fair value model
under current Generally Accepted Accounting Principles (GAAP), Cryptography assets It is classified as an indefinite-life intangible assetsIt undergoes a weakness test, which determines permanent decline in worth it.
when pregnant amount of the asset Exceeding its fair value, companies must recognize an impairment loss and adjust the carrying amount amount Accordingly.
However, the amendments proposed by the Financial Accounting Standards Board aim to introduce them changes for accounting treatment of encryption assets.
according to draft of Suggested modifications have been posted in March, FASB proposes those entities should Measure certain coins periodically assets at fair value and recognizing any changes in fair value in they net Enter.
This shift in reports requirements It will have great implications for Cryptocurrency holding companies assetsbecause it will remove need for Weak test f instead to focus on fair value measurement.
By recognizing fair value changes directly in net Income, the entities will provide a more A transparent and timely reflection of encryption asset’s market value.
The proposed amendments have received attention and support from industry players and with MicroStrategy is latest To endorse the “fair value model” proposal for Report crypto holdings. In a letter dated May 22, 2023.
Report encryption asset holdings at fair value modelas proposed by the Financial Accounting Standards Board us To provide investors with a more Appropriate view of our financial position and economic value of our bitcoin collectibles that in In turn it will be easier ability of Investors to make informed investment and capital allocation decisions. “
MicroStrategy, Open Letter.
FASB opened a file comment a period for Stakeholders to provide feedback on Proposed amendments to accounting standards for encryption assets. Interested parties will have the opportunity to submit their comments on proposed changes until June 6th.
the need for Revised Accounting Standards
as the largest public holder of bitcoinMicroStrategy support has its weight in Industry and highlights growing recognition of the need for Revised Accounting Standards in encryption space.
If implemented, this changes would bring more A unified and consistent approach to reporting cryptocurrencies assets.
