Trade Group Calls for Digital Currency Accounting Guidance
A project to create accounting guidance for digital currency could be added to the Financial Accounting Standards Board’s (“FASB”) standard-setting agenda. In response to a request from the Digital Chamber of Commerce, the FASB plans to hold a public meeting to review whether a digital currency project is necessary. A date for the meeting has yet to be announced.
In its June 8 letter, the Digital Chamber of Commerce asked for the FASB to establish guidance regarding when and how to measure digital currency. The letter calls for the FASB to develop an accounting model allowing companies to acknowledge digital currency when they manage the economic benefits, and assess the currency at fair value with changes noted in income.
Perianne Boring, the founder and CEO of the trade group, considers authoritative accounting guidance a mission-critical issue to the digital currency market. Boring said accounting guidance is needed due to the rise in acceptance of digital currency payments among major companies like Microsoft and Dell. Additionally, businesses hold digital currency as an asset that can be sold when its value increases. As a result, according to the Digital Chamber of Commerce, the market indicates a necessity for consistent guidance.
Financial professionals are conflicted over the suitable accounting guidance for digital currency. Several professionals favor Topic 305, Cash and Cash Equivalents. Others have suggested Topic 825, Financial Instruments; Topic 350, Intangible Assets; and Topic 330, Inventory, as the appropriate guidance. Boring remarked that the conflicting views and insufficient accounting guidance creates auditing questions that could negatively impact investors and research and development, and impede start-up companies from going public.
Topics: Cash and Cash Equivalents (Topic 305), digital currency, FASB, FASB standard-setting agenda, Financial Accounting Standards Board "FASB", Financial Instruments (Topic 825), Intangible Assets (Topic 350), Inventory (Topic 330)