An Analysis of the Internal Consistency of the New Accounting Standard for Virtual Currencies in Generally Accepted Japanese Accounting Principles: A Virtual Currency User Perspective

An Analysis of the Internal Consistency of the New Accounting Standard for Virtual Currencies in Generally Accepted Japanese Accounting Principles: A Virtual Currency User Perspective

Mineo Tsuji (Osaka Prefecture University, Sakai, Japan) and Mitsuki Hiraiwa (Osaka Prefecture University, Sakai, Japan)
DOI: 10.4018/IJSSOE.2018040103

Abstract

While there is no specific guidance in IFRS or US GAAP on accounting for virtual currencies, the ASBJ issued the PITF on the Accounting for Virtual Currencies under the PSA on March 14, 2018 as part of J-GAAP. The standard subscribes that, if an active market exists for the virtual currency, such a virtual currency should be measured using the market price at the balance sheet date, and any difference between the carrying amount should be recognized as a gain or loss. This article examines logically the internal consistency of the accounting information of virtual currencies subscribed by the standard in J-GAAP and between the standard and IFRS. The results indicated that it is appropriate to present virtual currencies at the recoverable amount as in the case of other monetary assets in J-GAAP and that there are no significant differences internationally between the standard and the IFRS.
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Institutional Background In Japan

In 2016, the Act was amended by the Act for the Partial Revision of the Banking Act, Etc. This made it compatible with the Environmental Changes Wrought in the Development of Information and Communication Technologies (Act No. 62 of June 3, 2016) to define virtual currencies (Article 2(5)) and to introduce a registration system for virtual currency dealers (Article 63-2). As a result of the amendment, from the first full annual period following April 1, 2017, the financial statements of registered virtual currency dealers would be subject to financial statement audits by a certified public accountant or an audit corporation (Article 63-14(3)).

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