Regulatory updates

Recently, the Financial Accounting Standards Board (FASB) issued the Accounting Standards Update (ASU), Intangibles – Goodwill and Other-Crypto Assets (Subtopic 350-60) to improve the accounting for and disclosure of certain crypto assets. The amendments in the ASU apply to all assets that meet all of the following criteria:

• Fall within the definition of intangible asset as defined in the FASB Accounting Standards Codification
• Do not provide the asset holder with enforceable rights to or claims on underlying goods, services, or other assets
• Are created or reside on a distributed ledger based on blockchain or similar technology
• Are secured through cryptography
• Are fungible, and
• Are not created or issued by the reporting entity or its related parties.

These criteria together are referred to as the ‘crypto assets criteria’. Some of the key amendments introduced pertain to:

• Accounting for crypto assets: An entity is required to subsequently measure assets that meet the crypto assets criteria at fair value with changes recognised in net income each reporting period.
• Presentation of crypto assets: An entity should present – crypto assets measured at fair value separately from other intangible assets in the balance sheet, and changes from the remeasurement of crypto assets separately from changes in the carrying amounts of other intangible assets in the income statement (or statement of activities for not-for-profit entities).
• Presentation of cash receipts arising from crypto assets: The amendments require specific presentation of cash receipts arising from crypto assets that are received as non-cash consideration in the ordinary course of business (or as a contribution, in the case of a not-for-profit entity) and are converted nearly immediately into cash.
• Disclosure requirements: The amendments prescribe that for annual and interim reporting periods , an entity should disclose:

• The name, cost basis, fair value, and number of units for each significant crypto asset holding and the aggregate fair values and cost bases of the crypto asset holdings that are not individually significant
• For crypto assets that are subject to contractual sale restrictions – the fair value of those crypto assets, the nature and remaining duration of the restriction(s), and the circumstances that could cause the restriction(s) to lapse.

Further, for annual reporting periods , the amendments require the following information to be disclosed:

• A roll-forward, in aggregate, of activity in the reporting period for crypto asset holdings, including additions (with a description of the activities that resulted in the additions), dispositions, gains, and losses
• For any dispositions of crypto assets in the reporting period, the difference between disposal price and the cost basis and a description of the activities that resulted in the dispositions
• If gains and losses are not presented separately, the income statement line item in which those gains and losses are recognised, and
• The method for determining the cost basis of crypto assets.

Effective date: The amendments are effective for all entities for fiscal years beginning after 15 December 2024, including interim periods. Early adoption is permitted for both interim and annual financial statements that have not yet been issued.

To access the text of the ASU, please click here

Recently, FASB issued the ASU, Income Taxes (Topic 740) on improvements to income tax disclosures. The ASU improves the transparency of income tax disclosures by requiring:

• Consistent categories and greater disaggregation of information in the rate reconciliation, and
• Income taxes paid disaggregated by jurisdiction.

Further, the ASU also includes certain other amendments to improve the effectiveness of income tax disclosures. These include:

• Requiring all entities to disclose – income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign, and income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and foreign taxes
• Eliminating the requirement to disclose the nature and estimate of the range of reasonably possible change in the unrecognised tax benefits balance in the next 12 months, or make a statement that an estimate of the range cannot be made
• Removing the requirement to disclose the cumulative amount of each type of temporary difference when a deferred tax liability is not recognised, because of the exceptions to comprehensive recognition of deferred taxes related to subsidiaries and corporate joint ventures.

Effective date: For public business entities, the amendments are effective for fiscal years beginning after 15 December 2024. For other than public business entities, the amendments are effective for annual periods beginning after 15 December 2025. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance.

To access the text of the ASU, please click here