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Teacher, Firstly, I have a little bit confused to distinguish ICO and cryptocurrency, can you explain the difference please?
Secondly, I already have read 2 ACCA SBR articles: ‘Accounting for cryptocurrencies’ and ‘Asset ceilling test (IAS19), initial ICO, and non-financial performance measures’
+)For the first articiles ‘ Accouting for crytocurrencies’, in page 3/6: they said that ‘cryptocurrencies should not be accounted for financial assets’. So I think Crytocurrencies is not related to IFRS 9,7 and IAS 32.
+)For the second articles, in page 5/8: they said:’ the rights given to the tokens holders may be similars to the rights of the holders of debt, equity instruments or other financial instruments.
So I suggest that ICO can be accounted for financial instrument in accordance with IFRS 9.So 2 my opinions is right?
I hope your replies. Thank you so much.
Cryptocurrency – intangible asset not financial asset.
ICO – is like an IPO (international public offering) where the company gives something similar to debt or similar to equity. So, yes, it’s posh IFRS 9!
Thank you teacher Widberg, I almost understand.
I have another matter:Normally (I studied in SBR Video – Financial instrument in Opentution guided by Teacher Chris) Financial instrument will related to bond, shares, cash and not involve goods and services.
In this case Cryptoncurrency plays a role as a bond, shares similarly. The issuers (a party issues Cryptoncurrency) receive cash from investors and promise to give Cryptocurrencies (ie: token) to investors.
Therefore they (issuers) initial recognise:
DR: Financial liability
CR: Cash – that they receive from investorsSubsequently (at end of term – that date they pay cryptocurrency to investors)
DR: Cryptocurrency – IAS 38 (instead of cash)
CR: Financial liabilityWhether my opinion is right or not? Can you help me please. Thank you teacher.
I appologize that I can not present clearly because I’m not good at English.
Not sure I understand your double entry – first journal should be:
Dr Cash Cr Financial Liability (FL)
Second journal
Dr FL Cr Intangible asset (assuming that the crypto is intangible)
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