FASB ASU 2023-08 explains a change to US GAAP, the generally accepted accounting principles in the United States. FASB is the Financial Accounting Standards Board, the standard-setter; ASU means Accounting Standards Update, a document communicating changes. Authoritative rules sit in the Accounting Standards Codification, ASC, to which a subtopic for defined crypto assets was added. Separate the initial transition, later remeasurement, required disclosures and actual cash receipts.
FASB issued the update on 13 December 2023. New subtopic ASC 350-60 focuses on subsequent measurement, presentation and disclosures for covered assets. “Subsequent” means what happens to an item already recorded in the accounts. Initial measurement, recognition and later derecognition remain under other US GAAP. A purchase therefore starts with the applicable transaction rules. The update’s number alone does not explain every entry from purchase to sale. [1] [2]
All conditions must hold together. The asset is intangible under the accounting definition, without physical substance, and gives no enforceable claim on underlying goods, services or other assets. It is created or resides on a distributed ledger, a record shared across participants using blockchain or similar technology, and is cryptographically secured. It must be fungible, with interchangeable units, and neither created nor issued by the reporting organisation or a related party. An NFT, a non-fungible token, fails fungibility; a token claiming another asset fails the claims condition. FASB clarifies that mining as a company’s only involvement in creating the rewards it receives does not make it the creator of those coins. The number of units alone does not decide scope. [2] [1]
Required adoption covers fiscal years beginning after 15 December 2024 and interim periods within those years. For a normal calendar year, that means 1 January 2025. It does not require every company to switch on the same day regardless of its fiscal year. Early adoption was permitted for statements not yet issued or made available for issuance. Choosing it during an interim period applied from the beginning of that year. It was not an option to use the new method only in the third quarter while leaving the earlier part aside. [2]
On first adoption, the cumulative difference adjusts opening retained earnings, past results kept in the business, or another appropriate equity component. Equity is the accounting difference between assets and liabilities. Our model has old carrying value of 30000 USD, US dollars, and opening fair value of 60000: a difference of 30000. If a separately determined tax effect reduces that adjustment by 6000, the net equity change is 30000−6000=24000. The standard does not prescribe that tax amount of 6000. Nor should the 24000 adjustment be presented as ordinary operating profit or cash received. [1]
Continue after transition. The value of the same asset quantity falls from 60000 to 55000 USD. The subsequent change is −5000 before tax; cash received from remeasurement alone is 0. Covered assets are presented separately from other intangible assets, and remeasurement changes separately from changes in those other carrying amounts. The reader can see the effects of the crypto reserve’s fluctuations. Do not merge the opening equity adjustment with later earnings, or confuse remeasurement with a sale. [1]
Interim and annual information identifies significant holdings’ name, cost basis, fair value and units. Cost basis is the amount used under the relevant method to calculate disposal gains or losses; smaller holdings are aggregated. For contractual sale restrictions, disclose the restricted assets’ value, the nature and remaining duration of restrictions, and how they may lapse. Our 2 BTC, of which 1 is restricted, therefore do not automatically mean 2 freely saleable BTC. Disclosure itself does not end the restriction. [1]
Our reconciliation in thousand USD opens at 100. Additions of 30, dispositions of 20, gains of 15 and losses of 5 give: 100+30−20+15−5=120. If +15 and −5 are net results of BTC and ETH holdings, ETH being Ethereum’s native units, the annual reconciliation must not replace them with only +10. Results of individual crypto assets with net positive and negative remeasurement are presented separately. Include activity descriptions, realised disposal results against cost basis and the method used to determine it. A carrying-value disposition of 20 is not automatically cash sale receipts of 20. [1]
A merchant may receive a crypto asset for ordinary goods or services and convert it nearly immediately to money. Those cash receipts are operating cash flow, cash movements from ordinary activity. Here “nearly immediately” means a short period expected to be hours or a few days, not weeks. Our merchant receives 20 USD this way. That is neither a reserve’s noncash remeasurement gain nor a rule for every sale of long-held BTC. FASB covers US GAAP, not IFRS. The international committee decision for the cryptocurrencies considered distinguishes IAS 2 for inventories and IAS 38 for intangible assets. Tax effects are a separate question. [1] [3]
For the clearest picture, read this entry together with Impairment accounting, Fair value accounting, Cash flow, Corporate Bitcoin Treasury. The reverse links also lead from Fair value accounting, Impairment accounting.