Its not uncommon in the world of finance for accountants to encounter challenges related to an evolving discipline for which no accounting standard would have explicitly existed earlier. One example is in the manner how the world of tokens or cryptocurrencies is evolving as no accounting standard currently exists to explain how this asset class should be accounted. In such situations historically, accountants have had no other alternative but to refer to existing accounting standards in underpinning the rules of accounting related to real, nominal, and personal classification of accounts based on fundamental utility, which the asset is being subjected to. In this article we will try to establish with valid reasoning as what accounting rules must apply to specific business events in dealing with cryptos while we analyze the below four financial reporting challenges related to such assets:
Ascertaining the appropriate balance sheet classification for cryptocurrencies.
Determining if cryptos should be carried at fair value or cost, subjected to impairment testing.
Establishing if gains or losses should be recognized, or not recognized at all until sold.
Selecting the most appropriate price information while valuing this asset class.