Tentative Board decisions are provided for those interested in following the Board’s deliberations. All of the reported decisions are tentative and may be changed at future Board meetings.

Wednesday, December 14, 2022 FASB Board Meeting

Accounting for and disclosure of crypto assets. The Board discussed how entities that hold crypto assets within the scope of this project should present and disclose crypto assets in the financial statements.

The Board decided to require an entity to:

  1. At a minimum, present the aggregate amount of crypto assets (within the scope of this project) separately from other intangible assets that are measured using other measurement bases
  2. Present gains and losses on crypto assets (within the scope of this project) in net income and present those gains and losses separately from the income statement effects of other intangible assets, such as amortization or impairments
  3. Classify crypto assets received as noncash consideration during the ordinary course of business that are converted nearly immediately into cash as operating cash flows.
These presentation requirements would be applicable to all entities, including public and private entities. The Board also decided that investment companies and not-for-profit entities should present their financial statements in accordance with the presentation requirements in Topic 946, Financial Services—Investment Companies, and Topic 958, Not-for-Profit Entities, respectively, subject to minor amendments that would clarify the inclusion of crypto assets.

The Board affirmed that disclosures in Topic 820, Fair Value Measurement, would be required for crypto assets within the scope of this project. Those disclosures would be required in annual and interim periods, consistent with the existing requirements in Topic 820.

The Board also decided to require an entity to disclose the following:

  1. At both annual and interim periods, the following information about each significant crypto asset holding (as determined by the fair value of that holding): the name of the crypto asset, fair value, units held, and cost basis.
  2. At both annual and interim periods, the fair value and cost basis of other crypto asset holdings, which may be aggregated into a single line item.
  3. At annual periods, a reconciliation of activity between the beginning and end of the period for total crypto asset holdings. This disclosure would require that an entity disaggregate information by additions, dispositions, gains, and losses during the period and include a description of the additions and dispositions.
  4. At annual periods, for disposition of crypto assets during the period, the difference between the sale price and the cost basis of those assets.
  5. At both interim and annual periods, the fair value of the crypto assets that are restricted from sale, the nature and remaining duration of the restriction, and circumstances that could cause a lapse in the restriction(s).
The disclosure requirements would be required for all entities, including public and private entities, as well as entities that apply industry-specific guidance (to the extent that the requirements would not duplicate existing industry-specific disclosure requirements).

The Board considered and decided not to require the following disclosures:

  1. The portion of unrealized gains and losses for the period that relates to crypto assets still held at the reporting date
  2. The nature and purpose of crypto asset holdings
  3. The holder (for example, the entity, its agent, or another third party) of the cryptographic private key information and the associated crypto assets’ fair values
  4. The time of day, time zone, and date the pricing information was obtained to measure an entity’s crypto assets.
The Board will consider scope refinements, transition, and whether the expected benefits of a proposed Accounting Standards Update would justify the expected costs at a future meeting.

Scope application of profits interests awards: Compensation—Stock Compensation (Topic 718). The Board added a project to its technical agenda that would clarify GAAP by adding illustrative examples to the Codification to demonstrate how an entity would apply the scope guidance in Subtopic 718-10 to determine whether a profits interest or similar award should be accounted for in accordance with Topic 718.

Transition and Transition Disclosures

The Board decided to require that an entity apply the guidance either (1) retrospectively to all prior periods presented in the financial statements or (2) prospectively to awards granted or modified on or after the effective date with qualitative disclosure about the nature of and reason for the change in accounting principle.

Analysis of Costs and Benefits

The Board concluded that it has received sufficient information and analysis to make an informed decision on the expected costs of the proposed amendments and that the expected benefits of those amendments would justify the expected costs.

Next Steps

The Board directed the staff to draft a proposed Accounting Standards Update for vote by written ballot, with a comment period of 60 days.