Ten questions are asked and answered in a new AICPA practice aid, Accounting For and Auditing of Digital Assets, under U.S. GAAP and GAAS (auditing standards). Digital assets are defined broadly as “digital records, made using cryptography for verification and security purposes, on a distributed ledger (referred to as a blockchain)” and are used for a variety of purposes, including “as a medium of exchange, as a representation to provide or access goods or services, or as a financing vehicle, such as a security, among other uses,” explains the practice aid. Impairment issues are also discussed, as digital assets that are classified as indefinite-lived intangible assets are not amortized but tested annually for impairment subsequent to their acquisition. The practice aid represents nonauthoritative guidance and will be updated as additional topics are completed.
Extra: Several other resources have emerged recently on this topic. The IRS issued guidance on virtual currency: Revenue Ruling 2019-24 and frequently asked questions (FAQs). Also, the CBV Institute published some interesting research, “Decrypting Crypto, an Introduction to Cryptoassets and a Study of Select Valuation Approaches.”