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Monday, December 16, 2013
No GAAP for Bit Coins FASB
“Bit Coins” potentially be a functional currency under which financial
statements can be prepared? This was a question posed to the Financial
Accounting Standards Board during the board’s meeting with its Small Business
Advisory Committee (SBAC) Nov. 7.
an auditor I thought I’d better start asking, said one SBAC member: what’s the
accounting for [bit coins]? Is it a cash? is it an investment? I believe it is
a medium of exchange, is there any guidance on what the accounting is for bit
is no generally accepted accounting principles (GAAP) that specifically addresses
financial reporting for bit coins, which means this would fall under other
comprehensive basis of accounting (OCBOA), FASB members who weighed in said.
coins” is a type of virtual currency, which loosely put, is created when a
complex mathematical algorithm is solved using high power computers. It seems like overnight bit coins have become
The SBAC discussions also indicated
that purchases can also be made on Amazon with bit coins so
there’s a real market for them and they have real value. “There’s the reporting side in the realm of
them being a sort of commodity, an asset, but it’s not a superefficient process
yet, but it’s getting better every day,” an SBAC member said.
are two sides to bit coins (no pun intended): bit coin mining, which is the
creation of bit coins and the commerce side of it. There are also people in the business of
mining with high powered computers and creating them--and there are a limited
number of them.
popularity of bit coins is heighted by their lack of traceability, attractive
for illicit activity but also increasingly attractive for legitimate business
as well. “So they’re using it a lot and therefore have
created the demand but that also creates an avenue for legitimate businesses to
also use this thing that now has value for legitimate businesses as well,” an
SBAC member said.
According to published reports in
November, a Florida customer purchased a $103,000 Tesla from Lamborghini
Newport Beach using 91.4 bit coins. Reportedly, more sales of Lamborghini’s will
ensue -- from customers using bit coins.
Attracting Government Scrutiny.
bit coins market has grown enough to attract government scrutiny. The government’s spending a lot of time
investigating and trying to understand how they can regulate or monitor it, the
SBAC discussions revealed.
of the big issues in the tax side of the world is there’s transactions going on
that people aren’t paying taxes on—there are numerous concerns about this but
it is a real thing happening,” an SBAC member said.
member said bit coins trading may be right under our noses. “If you think about
it – this is happening among perhaps among a lot of children of yours in this
room, because they buy and sell virtual currency for video games,” he said.
Denise Lugo Staff Correspondent @Bloomberg BNA (email@example.com)
to post a comment.
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