TaxBit tool supports pricing justifications for digital asset accounting in fair value

A new tool from digital asset accounting solutions provider TaxBit provides companies with the resources to justify price selections from particular exchanges, as required in recent FASB guidance on fair value pricing for digital assets. 

Under the new FASB guidance, approved last year, digital assets will be accounted for at fair value, with changes recognized in net income each reporting period. These assets will be measured separately from other intangible assets in the balance sheet, and changes in the fair value measure of crypto assets, similarly, will be done separately from changes in the carrying amounts of other intangible assets in the income statement.

TaxBit noted that Guidance in ASC 820 explains how companies should perform an analysis to determine the appropriate pricing source for fair value measurements. Additionally, Question 18 of the AICPA’s Digital Asset Practice Aid clarifies that companies should not be using pricing aggregators, making the need for precise, auditable data more critical than ever. Consequently, according to TaxBit, enterprises need to perform an analysis to determine which specific exchange they should pull pricing from when determining crypto fair value measurements. 

TaxBit’s new Principal Market Analysis (PMA) support tool offers comprehensive coverage of assets and exchanges, leveraging TaxBit’s own pricing data. It also empowers companies to enact policy elections for how their Principal Market is determined; companies can select the time frame, assets, exchanges, and types of trading activities that are relevant to them. It also integrates with existing accounting workflows, allowing users to select principal markets, override default prices, and export results with a few clicks.

“Under the new fair value framework, companies need a solution that provides accurate pricing and quantifiable evidence supporting where the price is coming from in an audit-ready manner. TaxBit’s new PMA feature does just that and empowers companies to know the most appropriate pricing source for their portfolio. This tool revolutionizes how businesses handle fair value accounting, making it more efficient and accurate,” said Aaron Jacob, vice president of accounting solutions at TaxBit. 

Jacob, around when the standard was first approved, noted that TaxBit already worked with the new rules, as they had been working directly with the FASB throughout the entire standard-setting process, which allowed them know what they would need to change. Jacob at the time said that TaxBit has already supported fair value measurements, with pricing tied to the principal market, but it now includes the new disclosure requirements. Jacob, a former member of the FASB staff, said the company plans further improvements in the future, and named “specific fair value adjustment workflows” as one example.