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TECHNOLOGY
LEARNING RESOURCES

significantly after initial use or lose almost all their Accounting for Digital Assets Under U.S. GAAP,
value in under a year. It would also include NFTs Part II
that are “burned” (removed from circulation) after
In this webcast, you’ll learn how to apply the AICPA
limited use. Examples include: Digital Assets Working Group’s practice aid to help
■ Virtual event tickets (if the ticket may be account for digital assets.
retained and has collectible value, it may fall
WEBCAST
into the reusables category).
■ Memberships that must be renewed each year
or can only be used for a single entity. Blockchain for Digital Assets: Accounting for
■ Game items usable in only one game or one Digital Assets Under U.S. GAAP
family of games. Understand how to explain bitcoin payments to
Reusables: The most common types of NFT clients and how to account for other transactions
now, these are NFTs that have collectible, display, and investments involving crypto and digital assets
under U.S. GAAP.
or reusable value. They can be bought and resold on
marketplaces, and royalties can be collected on their CPE SELF-STUDY
repeated sales or use. Examples include:
■ Artwork. Understanding, Using, and Securing Crypto and
■ Collectible digital items for display/use in Digital Assets
virtual worlds.
■ Profile picture collections and avatars. An overview of securing cryptoassets, this course
covers wallets, which are the fundamental security
■ Memes (GIFs). concepts and the most important aspect of this
■ Music. new technology for accountants and auditors to
■ Virtual fashion. understand.
■ Trading cards. CPE SELF-STUDY
■ Text-based NFTs or literary works.
■ Game items that are usable across multiple For more information or to make a purchase, go to aicpa.org/cpe-learning or
platforms and in future games (consider whether call the Institute at 888-777-7077.
the item loses usefulness in under a year, in
which case it is likely a single-use NFT).
Perpetuals: These are NFTs that represent CFOs will find they must track, record, and report
permanent digital locations, primarily domain NFTs and other digital assets. NFTs are positioned
names and metaverse “land,” which is a specific as a building block for future growth in web-based
location in a virtual world (e.g., Decentraland). The tools and digital spaces; however, trying to predict
recordkeeper for these might be a state or federal what will be even a few years from now is as futile as
government leveraging a private blockchain, or it trying to predict social media in 1999. What is most
could be a public blockchain privately developed useful to CPAs at this juncture is a basic understand-
and maintained by its decentralized community. ing of how NFTs are created and function, and the
One interesting issue that may arise in the future framework provided in this article for categorizing
of decentralized finance, or DeFi, is whether virtual and ordering the many types of NFTs they may
properties can be mortgaged. encounter. ■
Real assets: These are NFTs tied to a real-world
physical asset and are used solely for the purpose of
ease of transfer and ownership authentication. The About the authors
accounting for these types of NFTs is most likely to
follow the accounting applicable to the underlying Stacey Ferris, CPA, CFE, is an associate director with HKA’s blockchain group
physical asset. and government contracts group in Washington, D.C. She is also an adjunct
accounting faculty member with the University of Maryland Robert H.
HOW NFTs WILL SHAPE THE FUTURE OF THE WEB Smith School of Business, teaching blockchain and its impact on accounting
NFTs have evolved dramatically since they were and audit for graduate accounting students. Peter Rehm, CPA (retired), is
first envisioned less than a decade ago. As digital an independent consultant in Atlanta, providing CFO advisory services
spaces become increasingly intertwined with real life, to enterprises interested in or actively transacting in cryptoasset-focused
accountants, tax specialists, auditors, regulators, and businesses. He is an AICPA-designated subject-matter expert on blockchain.

28 | Journal of Accountancy October 2022