Cryptocurrency – NBC Institute

CR – Nov 2018 – L3 – SC – Q6 – Financial Instruments (IAS 32)

Classify cryptocurrency holdings in financial statements, addressing IAS 32, IAS 38, and IAS 2.

Question

You have been asked to make a presentation to your team on cryptocurrencies. A snapshot of your draft presentation includes the following:

“Cryptocurrency is a new phenomenon in the financial market. A cryptocurrency is a digital or virtual currency designed to serve as a medium of exchange. Cryptocurrencies are created through cryptography, often with a maximum possible number of ‘coins’ that can exist through solutions to a complex algorithm with their value supported only by the laws of supply and demand. Cryptocurrencies are currently not regulated by government or other similar entity.

The following are some of the types of cryptocurrency in the market:

Bitcoin: The first-ever cryptocurrency that started the market awareness and “boom.”
Ethereum: A programmable currency that lets developers build different distributed apps and technologies that wouldn’t work with Bitcoin.
Ripple: Unlike most cryptocurrencies, it doesn’t use a blockchain to reach a network-wide consensus for transactions. An iterative consensus process is implemented, which makes it faster than Bitcoin but also makes it vulnerable to hacker attacks.

There are many merchants – both online and offline – that accept Bitcoin as a form of payment, while Ethereum and Ripple are not yet widely accepted.

Required:

Following your presentation, you are asked how a holding of cryptocurrency should be classified in the financial statements of your clients. (15 Marks)

Answer

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Tags: Cryptocurrency, Digital Currency, Financial instruments, Intangible Assets, Inventory
Level: Level 3

Topic: Financial Instruments (IAS 32, IFRS 9)

CR – July 2023 – L3 – Q2a – Associates and joint ventures

Classify the investment, advise on derecognition of assets, and explain the treatment of cryptocurrency under relevant IFRS standards.

Question

Digital Ghana Ltd has agreed to work with Pixel Ghana Ltd in order to develop a new musical platform for the Ghana Musician Association. On 31 December 2021, the companies established a new entity called Flowbeat Ltd with equal shareholdings and share in profit. Digital Ghana Ltd has contributed its own intellectual property in the form of employee expertise, cryptocurrency with a carrying amount of GH¢6 million, which now has a fair value of GH¢8 million, and an office building with a carrying amount of GH¢12 million with a fair value of GH¢20 million. The cryptocurrency has been recorded at cost in Digital Ghana Ltd.’s financial statements.

Pixel Ghana Ltd has contributed the technology and marketing expertise required for the smooth operations of Flowbeat Ltd. The board of Flowbeat Ltd will comprise of directors appointed equally by Digital Ghana Ltd and Pixel Ghana Ltd. Decisions are made by a unanimous vote.

Required:
In accordance with the provisions of relevant International Financial Reporting Standards:

i) Advise on the classification of the investment which Digital Ghana Ltd has in Flowbeat Ltd.
(3 marks)

ii) Advise on the derecognition of the assets exchanged for the investment in Flowbeat Ltd and any resulting gain/loss on disposal in the financial statements of Digital Ghana Ltd at 31 December 2021.
(2 marks)

iii) Advise whether the cryptocurrency should be classified as a financial asset or an intangible asset.
(2 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cryptocurrency, Derecognition, Financial Asset, IAS 28, IFRS 11, Intangible Asset, Joint Venture
Level: Level 3

Topic: Associates and joint ventures
Series: JULY 2023

CR – Nov 2018 – L3 – SC – Q6 – Financial Instruments (IAS 32)

Classify cryptocurrency holdings in financial statements, addressing IAS 32, IAS 38, and IAS 2.

Question

You have been asked to make a presentation to your team on cryptocurrencies. A snapshot of your draft presentation includes the following:

The following are some of the types of cryptocurrency in the market:

Bitcoin: The first-ever cryptocurrency that started the market awareness and “boom.”
Ethereum: A programmable currency that lets developers build different distributed apps and technologies that wouldn’t work with Bitcoin.
Ripple: Unlike most cryptocurrencies, it doesn’t use a blockchain to reach a network-wide consensus for transactions. An iterative consensus process is implemented, which makes it faster than Bitcoin but also makes it vulnerable to hacker attacks.

There are many merchants – both online and offline – that accept Bitcoin as a form of payment, while Ethereum and Ripple are not yet widely accepted.

Required:

Following your presentation, you are asked how a holding of cryptocurrency should be classified in the financial statements of your clients. (15 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cryptocurrency, Digital Currency, Financial instruments, Intangible Assets, Inventory
Level: Level 3

Topic: Financial Instruments (IAS 32, IFRS 9)

CR – July 2023 – L3 – Q2a – Associates and joint ventures

Classify the investment, advise on derecognition of assets, and explain the treatment of cryptocurrency under relevant IFRS standards.

Question

Required:
In accordance with the provisions of relevant International Financial Reporting Standards:

i) Advise on the classification of the investment which Digital Ghana Ltd has in Flowbeat Ltd.
(3 marks)

iii) Advise whether the cryptocurrency should be classified as a financial asset or an intangible asset.
(2 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cryptocurrency, Derecognition, Financial Asset, IAS 28, IFRS 11, Intangible Asset, Joint Venture
Level: Level 3

Topic: Associates and joint ventures
Series: JULY 2023

Question Tag: Cryptocurrency

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CR – Nov 2018 – L3 – SC – Q6 – Financial Instruments (IAS 32)

Classify cryptocurrency holdings in financial statements, addressing IAS 32, IAS 38, and IAS 2.

CR – July 2023 – L3 – Q2a – Associates and joint ventures

Classify the investment, advise on derecognition of assets, and explain the treatment of cryptocurrency under relevant IFRS standards.

CR – Nov 2018 – L3 – SC – Q6 – Financial Instruments (IAS 32)

Classify cryptocurrency holdings in financial statements, addressing IAS 32, IAS 38, and IAS 2.

CR – July 2023 – L3 – Q2a – Associates and joint ventures

Classify the investment, advise on derecognition of assets, and explain the treatment of cryptocurrency under relevant IFRS standards.

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CR – Nov 2018 – L3 – SC – Q6 – Financial Instruments (IAS 32)

Classify cryptocurrency holdings in financial statements, addressing IAS 32, IAS 38, and IAS 2.

You're reporting an error for "CR – Nov 2018 – L3 – SC – Q6 – Financial Instruments (IAS 32)"

CR – July 2023 – L3 – Q2a – Associates and joint ventures

Classify the investment, advise on derecognition of assets, and explain the treatment of cryptocurrency under relevant IFRS standards.

You're reporting an error for "CR – July 2023 – L3 – Q2a – Associates and joint ventures"

CR – Nov 2018 – L3 – SC – Q6 – Financial Instruments (IAS 32)

Classify cryptocurrency holdings in financial statements, addressing IAS 32, IAS 38, and IAS 2.

You're reporting an error for "CR – Nov 2018 – L3 – SC – Q6 – Financial Instruments (IAS 32)"

CR – July 2023 – L3 – Q2a – Associates and joint ventures

Classify the investment, advise on derecognition of assets, and explain the treatment of cryptocurrency under relevant IFRS standards.

You're reporting an error for "CR – July 2023 – L3 – Q2a – Associates and joint ventures"

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