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- This topic has 2 replies, 3 voices, and was last updated 1 year ago by
Stephen Widberg.
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- May 28, 2021 at 3:06 pm #622058
Sir in in dec 19 crypto currency related part
In last para Examiners ans state that
The best way to account for a cryptocurrency would be fair value as that is the value at which the entity will realise their investment or transact in exchange for goods and services. Accounting for cryptocurrency at fair value with movements reflected in profit or loss would provide the most useful information to investors but existing accounting requirements do not appear to permit this.
On the other hand, In last para Kaplan Kit ans state that
When offered a choice of measurement base, the Conceptual Framework
states that consideration should be given to the characteristics of the asset and
the way in which it contributes to future cash flows. Cryptocurrency has a
volatile market value and is often traded in the short-term. As such a current
value measurement (such as fair value) is likely to provide more relevant
information that historical cost. The Conceptual Framework states that profit or loss is the primary source of information about economic performance during the reporting period and that income and expenses would normally be presented in this statement. Income
or expenses might be presented in other comprehensive income if they result
from a current value remeasurement and if presentation in other
comprehensive income increases the relevance of profit or loss. However, if
cryptocurrency is held as an investment, then economic returns earned in the
period are likely to be of interest to investors when assessing overall economic
performance. Therefore, gains and losses on remeasurement of
cryptocurrency to fair value should probably be recorded in profit or loss. This
treatment would be consistent with financial assets held in the short-term,
measured in accordance with IFRS 9 Financial Instruments.My Qs is that in last para examiner has written different ans and Kit has written different ans, So are the both correct and acceptable?
May 29, 2021 at 6:00 pm #622222I think they are both saying FV with changes to P&L.
I think I prefer the examiner’s!
But, in this kind of question – they are just looking for a brief discussion. In SBR there may be no right answer, as in life. 🙂
February 23, 2023 at 3:59 pm #679489Unlike traditional currencies, the value of cryptocurrencies is not fixed by economic factors such as interest rates or GDP.
March 12, 2023 at 2:02 pm #681184🙂
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