Financial Reporting and Accounting Treatment of Crypto Assets: Professional Accountants Perspectives

Abstract

Crypto asset is a broad term covering all assets stored on distributed ledgers using block chain technology. Crypto assets are used to undertake commercial transactions and serve as investment options globally; yet there are no specific accounting standards that guide how crypto assets should be recorded in financial statements. There are few studies that address the issue of accounting treatment of crypto assets. The lack of literature has resulted in the need to investigate the views of professional accountants on how crypto assets should be reflected in financial statements. The research relied on primary data and adopted an expert sampling technique which is a form of judgmental sampling technique. The data was collected using questionnaire surveys to get the views of sixty-four professional accountants in Nigeria. The study attempts to contribute to the existing literature on crypto assets by providing a practical insight into the accounting treatment of crypto assets. The compliance of crypto assets having the features of assets in accounting was established by this study. According to the respondents’ crypto assets can be classified in various forms of assets like intangible assets, cash and cash equivalent, inventory, and financial instrument. Also, crypto assets can be classified as short-term assets or long-term assets. This is because of the accounting concept of substance over form that requires that the economic substance of transactions and events are decisive for the recognition and measurement of transactions in financial statements. The study concluded that crypto assets have an impact on financial statements of entities that hold the assets. The study recommends that there is need for standalone standards specifically for crypto assets to avoid the discretionary judgment current relied upon. There is also the need for the regulation of crypto assets in general.