Accounting for and Disclosure of Crypto Assets – Observations from Adopting ASC 350-60
Companies that have not yet adopted ASC 350-60, Accounting for and Disclosure of Crypto Assets (“ASC 350-60”), are required to adopt for fiscal years beginning after December 15, 2024. Many companies often underestimate complexities that may arise when adopting ASC 350-60. One such complexity surrounds determining whether a crypto asset is within the scope of ASC 350-60. While ASC 350-60 applies to assets that meet all of the scope criteria in ASC 350-60-15-1, not all digital or crypto assets will meet these criteria. For example, many wrapped tokens provide the holder with a right or claim on another asset and, as such, are generally determined to be outside the scope of the guidance. However, crypto assets can be wrapped in different ways and can provide the holder with varying rights. As such, companies will need to apply judgment in evaluating whether wrapped tokens are within scope of ASC 350-60. Similarly, companies may face complexities when evaluating whether liquid staking tokens are within the scope of ASC 350-60, as these crypto assets generally represent ownership of the portion of a pool of underlying staked assets and any rewards earned on such staked assets. Each crypto asset is unique, and it will be important for companies to understand the nature of the crypto assets they hold and the rights that they confer in order to appropriately adopt ASC 350-60. However, evaluating the nature of an entity’s assets can be complex and highly subjective.
Once a company has effectively scoped its crypto assets, another challenge that management may face is gathering all the relevant data for the preparation of complete and accurate disclosures. Like other assets measured at fair value, crypto assets that a company has determined to be within scope of ASC 350-60 are subject to the disclosure requirements in ASC 820, Fair Value Measurement. In addition, ASC 350-60 requires companies to provide more extensive disclosures about crypto asset holdings for both annual and interim periods. To effectively meet these new disclosure requirements, companies will need effective systems and processes for capturing complete and accurate information. Preparing and gathering the information needed to develop complete and accurate disclosures can be time consuming and requires much effort.
How Centri Can Help
At Centri, we understand the complexities and challenges of adopting ASC 350-60. We work as an extension of management to save you time and effort in several ways, including:
- Working with management to understand the nature of each of the company’s crypto assets to arrive at appropriate accounting conclusions
- Preparing technical accounting memorandums documenting the adoption of ASC 350-60
- Assisting management in preparing disclosures by gathering the relevant information and preparing supporting schedules
We work with your company to facilitate the effective adoption and preparation of accounting documentation. This not only ensures compliance with ASC 350-60 but also facilitates a smoother audit process, ultimately saving your company time and money.
Director | CPA
Yoland is a Director at Centri Business Consulting. She has over 10 years of experience in public accounting and accounting advisory experience. View Yoland Sinclair's Full Bio
Partner | Fintech and Digital Assets Practice Leader | CPA
Michael is a Partner at Centri Business Consulting and the leader of the firm’s Fintech and Digital Asset Practices. He has more than 10 years of experience in the accounting treatment of various transactions, including complex debt and equity analysis, business combinations and acquisition accounting process integration. View Mike Andrusko's Full Bio
Partner | Technical Accounting Practice Leader | CPA
Blake is a Partner at Centri Business Consulting and the leader of the firm’s Technical Accounting Practice. He has more than 18 years of public accounting experience. View Blake Roberts's Full Bio
About Centri Business Consulting, LLC
Centri Business Consulting provides the highest quality advisory consulting services to its clients by being reliable and responsive to their needs. Centri provides companies with the expertise they need to meet their reporting demands. Centri specializes in financial reporting, internal controls, technical accounting research, valuation, mergers & acquisitions, and tax, CFO and HR advisory services for companies of various sizes and industries. From complex technical accounting transactions to monthly financial reporting, our professionals can offer any organization the specialized expertise and multilayered skillsets to ensure the project is completed timely and accurately.
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