The Significant Bitcoin Impairment Losses Suffered by MicroStrategy Have Created an Untrue Impression

Crypto News – According to the paper, improvements to FASB accounting rules should assist businesses that own digital assets in getting rid of the negative perception that impairment losses have caused.

The Significant Bitcoin Impairment Losses Suffered by MicroStrategy Have Created an Untrue Impression

After the Financial Accounting Standards Board (FASB) voted to change how businesses report their finances, MicroStrategy (MSTR) will soon be able to report its Bitcoin (BTC) holdings each quarter without having to recognize impairment losses if the cryptocurrency’s price drops during the period in question, investment bank Berenberg said in a report Wednesday.

According to the report, MicroStrategy has claimed total impairment losses of $2.23 billion since implementing its Bitcoin acquisition strategy in August 2020. The highest impairment loss for MicroStrategy, $917.8 million, was reported in the second quarter of 2022. The loss was prominently highlighted in news coverage of the company’s earnings, creating the false impression that the company’s intrinsic worth had been significantly harmed, the bank claimed.

The change should help MSTR and other companies that hold digital assets to eliminate the poor optics that have been created by impairment losses under the rules that FASB has had in place,

analysts led by Mark Palmer

What was the FASB Vote About?

The FASB approved the use of fair-value accounting on Wednesday, allowing businesses to quickly display gains and losses on their income statements. Later this year, when the FASB officially approves the final text, businesses will be able to apply the new rules. The FASB noted that the new regulations would become effective as early as 2025, but businesses would have the option of implementing them earlier.