Crypto asset balances represented on a Balance Sheet are initially recorded at the cost basis. Given the values for these assets fluctuate, many companies wish to adjust the value of their holdings to reflect the current fair market value. Assuming marking assets to market is allowable in your jurisdiction, SoftLedger provides a straightforward way to record the necessary adjusting entries.
This guide will walk through the steps to bring the market value of crypto asset holdings onto your Balance Sheet through the following steps:
- Create an Unrealized Gain/Loss Ledger Account
- Determine the Date Period for the Revaluation
- Create a Journal Upload File from the Unrealized Gain/Loss
Create an Unrealized Gain/Loss Ledger Account
Create a Ledger Account to capture the Revenue from Unrealized Crypto Gain/Loss that could look something like this:
Determine the Date Period for the Revaluation
Set the System Date in the upper right corner for the date period to mark to market (e.g. December 31st, 2021), navigate to the Crypto Coins page, and export to excel.
Create a Journal Upload File from the Unrealized Gain/Loss
Once the Coins have been exported with the unrealized gain or loss value, convert that data into journal entries by mapping the right information to the Bulk Journal Upload File.
- In excel, add a second tab to the excel workbook that has the column headers from the Bulk Journal Upload Template
- Take the values from the Unrealized Gain/Loss column and add them to the debit (if amount is positive) or to the credit (if amount is negative)
- Add in the Journal Number to be individually numbered for each row (e.g. 1, 2, 3), Transaction Date and Posted Date as the System Date selected for the revaluation, the SourceLedger to be "Financial", and the Journal Reference to be something to indicate this process, such as "BTC Crypto Revaluation"
- Set the Location ID to the ID of the Location for which these revaluation Journal Entries should be created, likely the Global, or top holding Location. Note: Repeat this process for Location holdings if the mark to market revaluations need to be created for separate Locations.
- Be sure the Journal is set as a "reversing" type Journal with the reversal date set to the following day (e.g. January 1st, 2022)
- Enter the Ledger Account numbers for the Crypto Asset being revalued in each row (e.g. BTC to 185006)
- Copy all data entered thus far in the first set of rows to a second set of rows immediately underneath the first set
- Transpose the debits and credits from the first set (e.g. if you had a debit of 87,380,346.64 against an asset in one row, in the second set of rows that would be a credit of 87,380,346.64
- In the second set of rows, delete out the Ledger Accounts entered and replace them with the Crypto Revaluation Account entered at the start of this process (e.g. 70500)
- Save the file and upload under the Financial>Bulk Journal Import section
See the example bulk journal import file completed: