The U.S. Financial Accounting Standards Board (FASB) has recently approved new rules for the accounting treatment of digital assets, in a move that analysts at Berenberg Capital suggest will reduce negative perceptions affecting firms with crypto holdings.
Berenberg’s lead equity research expert, Mark Palmer, highlighted that businesses including MicroStrategy stand to gain significantly from this policy revision, as they will soon be able to report the fair value of the digital assets in their balance sheets,
The changes mean companies will be able to report their digital asset holdings without having to realize impairment losses, which could mean less negative coverage. MicroStrategy has, for example, racked up over $2.23 billion in cumulative impairment losses, as some of its quarterly reports included sizable impairment losses on its BTC holdings, reflecting downward BTC price moves.
Per Palmer, these impairment losses give an impression “that the company’s inherent value had been negatively impacted when such was not the case.” The FASB’s new rules will allow the holdings to be reported at fair value, therefore reports will reflect current values, including price rebounds.
The rules, slated for 2025, will change previous stipulations that mandate the inclusion of impairment losses that cannot be adjusted even if the price of an asset recovers.
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- Source: https://www.cryptocompare.com/email-updates/daily/2023/sept/08/
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