What is Bitcoin and what does it do?
How to produce Bitcoin?
According to MFRS 102 Inventories, if the purpose of holding cryptocurrencies is for sale in the ordinary course of business, it should be treated as inventories. For example, an entity acts as a commodity broker-trader who actively trade in it with the purpose of generating profit from the fluctuations in price. Such entity should treat any cryptocurrencies held as inventories.
Inventories should be measured at the lower of cost and net realisable value. However, in this case, the more appropriate valuation should be fair value less costs to sell. However, if the purpose of holding cryptocurrencies is for investment purpose (capital appreciation) over a long period of time, MFRS 102 would not apply.
Moreover, Bitcoin can be categorised as intangible asset according to MFRS 138 Intangible asset because: -
Bitcoin is an intangible asset with indefinite useful life which is not amortised but impairment test be performed annually under revaluation model when there is an active market for the asset. In conclusion, Bitcoin may be categorised under inventory or intangible asset depending on the purpose of holding it and the entity’s business nature.