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KASB "Cryptocurrency is inventory or an intangible asset"

The Korea Accounting Institute concluded that cryptocurrency, such as bitcoin, can be categorized as either inventory or an intangible asset. While cryptocurrency falls short on being defined as cash or a financial asset, it does meet the definition of intangible asset because it could bring future economic benefit. Cryptocurrency, inventory or an intangible asset In response to related queries, the Korea Accounting Institute said cryptocurrency could be either inventory or an intangible asset. The institute said if virtual currency is possessed for the purpose of sales, IAS-2, which defines inventory as assets, could be applied. If not, the IAS 38 intangible asset definition could be applied. The institute based its conclusion on cryptocurrency: recorded in decentralized ledgers that are encrypted for security purposes; not created by a competent authority or other concerned parties; and does not involve a contract between the cryptocurrency owners and other parties. These are the characteristics of cryptocurrencies that have been issued on public blockchains. Not cash or a financial assets The institute said it does not see cryptocurrency as cash or a financial asset, as cryptocurrency is not currently a means of exchange and there’s huge volatility in its value. Additionally, it does not meet the contractual rights standard required for financial assets including cash. As such, it concluded that cryptocurrency does not meet the definition of cash or financial assets. The institute concluded that cryptocurrency is an intangible asset with no physical form. Intangible assets have no form, unlike intangible assets, such as a buildings and cash. The accounting institute said while the virtual currency has no physical form, it is a nonmonetary asset that can be regulated by the company and could create future economic benefit. The institute said the International Financial Reporting Interpretations Commission (IFRIC) in June also announced a tentative conclusion on cryptocurrency holdings.

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