The popularity of cryptocurrencies (such as Bitcoin or Ether or Dogecoin) has soared in recent years. As acceptance of cryptocurrency and digital assets become more widespread, accounting for cypto and digital assets still pose a challenge to many due to lack of guidance under International Financial Reporting Standards (or equivalent such as Singapore Financial Reporting Standards (SFRS)).
This requires companies to interpret and apply existing guidance under IFRS or equivalent standards. For example, an approach of accounting for holdings of cryptocurrencies at fair value through profit or loss may seem intuitive but is incompatible with the requirements of the IFRS or SFRS in most circumstances.
This creates a challenge from accounting perspective for companies involved in holding, issuing or mining crypto and digital assets.
Determining the right accounting treatment
An entity may have to evaluate following standards to determine appropriate accounting treatment of crypto transactions.
Holding of Cryptocurrencies
Companies have to evaluate whether crypto-currency holding is considered cash and cash equivalents or financial assets or any other class of assets
Issuance of crypto tokens
Companies have to evaluate whether the proceeds from issuance of crypto tokens is a capital or a revenue transaction. Accordingly such tokens may be classified as equity or liability or revenue in the financial statements.
Holding Non-fungible tokens
Similar to crypto-currency holders of non-fungible tokens need to assess the correct classification of these assets in the financial statements (i.e financial assets or cash or any other class of assets).
Issuing non-fungible tokens
Companies have to evaluate whether the proceeds from issuance of crypto tokens is a capital or a revenue transaction. Accordingly such tokens may be classified as equity or liability or revenue in the financial statements.
How we can support
Accounting Advise
Assist the finance team evaluate the transactions and advise on accounting under IFRS and SFRS. We can also help companies draft accounting policies for crypto and NFT related transactions.
Implementation
Assist with calculation of adjustments required for crypto and NFT transactions.
Financial Statement Preparation
Assist management draft appropriate financial statements in accordance with IFRS and SFRS.
Consolidated financial statements
Cyrpto companies typically have multiple entities (such as in Dubai, Cayman, BVI and/or Singapore). We can assist management prepare consolidated financial statements for management or statutory purposes.
You can discuss your unique requirements at +65 84831463 or simply fill the required details on Enquiry Now Page and send us at info@outsourcingwise.com