Bitcoin: Its Economics for Financial Reporting

Australian Accounting Review, Vol. 27(2): 220-227, 2017

12 Pages Posted: 5 May 2015 Last revised: 20 Dec 2017

See all articles by Boon Seng Tan

Boon Seng Tan

Nanyang Technological University (NTU) - Nanyang Business School

Kin-Yew Low

Nanyang Technological University - Nayang Business School

Date Written: May 4, 2015

Abstract

There is yet any official guidance on the financial reporting of Bitcoin transaction from the standard setters as the crypto-currency become increasingly popular and tax accounting guidance begin to appear in 2014. Designed as a decentralized currency, Bitcoin will not become a reporting currency and will instead complement fiat money. We argue that the accounting principle of faithful representation requires interpreting the economic substance for financial reporting that varies with reporting entity: trading firms recognize Bitcoin like a foreign currency and measure the revenue, or expense, at the equivalent amount of the reporting currency; digital currency exchanges recognize Bitcoin as goods in line with tax accounting treatment. An Economica paper by Radford (1945) describing cigarette being used as commodity money in a POW camp has alluded to this economic basis. This paper applies accounting principle to a practical issue and contributes to the thinking process which may help standard setter issue an interpretation.

Keywords: Bitcoin, Reporting Entity, Faithful Representation, Financial Reporting

JEL Classification: M41, M48

Suggested Citation

Tan, Boon Seng and Low, Kin Yew, Bitcoin: Its Economics for Financial Reporting (May 4, 2015). Australian Accounting Review, Vol. 27(2): 220-227, 2017. Available at SSRN: https://ssrn.com/abstract=2602126 or http://dx.doi.org/10.2139/ssrn.2602126

Boon Seng Tan (Contact Author)

Nanyang Technological University (NTU) - Nanyang Business School ( email )

Singapore, 639798
Singapore

Kin Yew Low

Nanyang Technological University - Nayang Business School ( email )

S3-B2a-18
Nanyang Avenue
Singapore, 639798
Singapore
(65)67904903 (Phone)
(65)67924217 (Fax)

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