Impairment: writing bitcoin down in the accounts

What it means

An impairment is an accounting write down. If an asset held at cost is worth less than its carrying amount, and the shortfall is not expected to reverse soon, the accounts recognise a loss and reduce the carrying amount. Impairment matters for bitcoin whenever it is held under a cost model, because the price can fall well below cost.

A UK company that holds bitcoin under the FRS 102 cost model for intangible assets measures it at cost less accumulated amortisation and impairment. FRS 102 Section 27 sets out when to test for impairment and how to measure it. FRS 102 also treats every intangible asset as having a finite useful life, which raises questions about amortisation and residual value for bitcoin that are judgements for the accountant. Micro-entities using FRS 105 use historical cost and also need to consider impairment. ICAEW's helpsheet on cryptocurrencies under FRS 102 walks through the choices.

Before ASU 2023-08, US companies generally held bitcoin as an indefinite lived intangible asset at cost less impairment. Any fall in price below carrying amount was written down, and later price rises could not be written back up until the coins were sold. ASU 2023-08 replaced that model for crypto assets within its scope with fair value through net income. Assets outside its scope can still follow the older intangible asset model.

Why it matters for a company

Impairment changes how a holding looks to lenders, investors and the board. Under a cost model with impairment, a company can show a loss on bitcoin it still holds, and in some frameworks it cannot show a later recovery until it sells. That affects reported profit, distributable reserves and covenant tests. Impairment in the accounts is not the same as a loss for tax: in the UK and the US, tax on bitcoin held as an investment generally follows disposals.

Common mistakes

• Claiming an impairment as a tax loss.
• Not documenting the price source and date used for the test.

Related

• Fair value
• Section 104 pool
• Cost basis
• UK accounting under FRS 102
• All glossary terms

Sources

Primary sources only. Each link was checked on 9 November 2026. Rules change, so confirm the current version with your adviser.

1. FRCFRS 102: The Financial Reporting Standard applicable in the UK and Republic of Ireland
2. FRCFRS 105: The Financial Reporting Standard applicable to the Micro-entities Regime
3. ICAEWAccounting for cryptocurrencies under FRS 102 (helpsheet)
4. FASBASU 2023-08, Intangibles: Goodwill and Other, Crypto Assets (Subtopic 350-60)