Cryptocurrency Revaluation Gain — IAS 38 Revaluation Model
Recording an upward revaluation of cryptocurrency holdings under the IAS 38 revaluation model.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Cryptocurrency Asset (Fair Value Increase) | Asset (+) | 200,000.00 | - |
| Revaluation Reserve (OCI) | Equity (+) | - | 200,000.00 |
💡 Accountant's Note
Under the IAS 38 revaluation model, an active market must exist for the cryptoasset (Bitcoin and Ethereum qualify). Upward revaluations are recognised in Other Comprehensive Income (OCI) as a revaluation surplus in equity — not through P&L. Downward revaluations first reduce the revaluation surplus; any excess is recognised in P&L. The revaluation gain in OCI is never recycled to P&L on disposal — it transfers to retained earnings.
Practitioner & Systems Framework
💻 ERP Architecture
The revaluation model requires fair value to be measured reliably and sufficiently regularly. For Bitcoin and Ethereum, the active market criterion is met — prices are quoted on major exchanges continuously. The revaluation entry is posted quarterly or monthly by adjusting the carrying value to the current market price. The credit goes to the revaluation reserve in equity (OCI), not to the income statement. On disposal, the gain/loss is calculated against the revalued carrying amount (not the original cost), and the revaluation reserve is transferred directly to retained earnings — no P&L recycling. This treatment is significantly different from FVTPL financial assets where all gains/losses go through P&L.
⚠️ Audit Flags
Auditors confirm that the IAS 38 revaluation model election is documented and that an active market exists for the specific cryptoasset being revalued. Test that revaluations are performed with sufficient regularity (at least at each reporting date). Confirm that downward revaluations correctly reduce the revaluation reserve before hitting P&L. Review the disposal accounting — the gain/loss on disposal must be calculated against the revalued carrying amount, not historical cost. Confirm the revaluation reserve is non-distributable (in most jurisdictions, unrealised revaluation gains cannot be paid as dividends).
📄 Required Documentation
Active market assessment for the cryptoasset, fair value at revaluation date (named source), revaluation calculation (carrying value to fair value), revaluation reserve movement in equity, IAS 38 revaluation model election documentation, and disposal calculation methodology.
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