CCA Cryptocurrency Taxation & Accounting 2

Question 1

Under US GAAP, how was cryptocurrency typically classified on the balance sheet before FASB ASU 2023-08?

Accepted Answer

As an indefinite-lived intangible asset

Answer

As cash and cash equivalents

Answer

As a financial instrument at fair value

Answer

As inventory

Question 2

What does FASB ASU 2023-08 require regarding the measurement of certain qualifying crypto assets?

Accepted Answer

Fair value measurement with changes recognized in net income

Answer

Historical cost accounting only

Answer

Lower of cost or market value

Answer

Equity method accounting

Question 3

What is the FIFO method as applied to cryptocurrency cost basis accounting?

Accepted Answer

The oldest acquired coins are considered sold first

Answer

The newest acquired coins are considered sold first

Answer

All coins are averaged and sold at a blended rate

Answer

Each sale is matched to the most profitable lot

Question 4

Under IFRS, which standard may apply if a company holds cryptocurrency as inventory for sale in the ordinary course of business?

Accepted Answer

IAS 2 — Inventories

Answer

IFRS 9 — Financial Instruments

Answer

IAS 38 — Intangible Assets

Answer

IFRS 13 — Fair Value Measurement

Question 5

What was the key limitation of the indefinite-lived intangible asset treatment for cryptocurrency under old US GAAP?

Accepted Answer

Impairment losses were permanent and could not be reversed

Answer

Impairment losses could be reversed if value recovered

Answer

Assets had to be marked to market quarterly

Answer

Gains were recognized before realization

Question 6

What is the primary valuation challenge when accounting for cryptocurrency on financial statements?

Accepted Answer

Price volatility and the lack of a single standardized pricing source

Answer

Cryptocurrencies have a fixed value set by central banks

Answer

All cryptocurrencies trade at par value on regulated exchanges

Answer

Valuation is simple because prices are always publicly available

Question 7

For a company whose core business is cryptocurrency trading, how should gains from crypto transactions be presented on the income statement?

Accepted Answer

As operating revenue

Answer

As other comprehensive income

Answer

As an extraordinary item

Answer

Below the line as discontinued operations