Description

While the Crypto Transactions page serves as the full register of all activity in your system, the unused cost layers page will filter your crypto transactions to display only the transaction lines that remain as unpicked cost layers. These layers are those that remain to be used in upcoming liquidating events, and are the layers that make up the cost basis values against Coins and the Coin Ledger Accounts displayed in reports. This insight generally allows customers to review what the upcoming cost impact would be from a liquidating event before completing it, as well as provides the underlying data for any crypto FMV mark to market actions.

Note: Before reviewing this page, be sure that the Cost Basis function has been completed through any date period you plan to review.

Reviewing for upcoming liquidating event

Users can review the oldest remaining cost layer(s) per SoftLedger Coin per SoftLedger Wallet within this view to determine the upcoming financial impact of a liquidating event (e.g. Crypto Withdrawal, Trade out of, or Transfer out of an Asset).

For instance, if I want to see the oldest remaining Bitcoin in a wallet where I plan to withdraw 1 coin, I can filter the data for the BTC Coin and by the wallet I plan to withdraw in to determine the cost layer that will be used to facilitate this event:
From this view, I can see that I have a cost layer with a full coin from December 3rd, 2021 with a price (cost basis) of about $56, 580. Therefore, if I plan to withdraw 1 BTC Coin from the “Primary” wallet, I know that the cost basis for that 1 BTC will be that price, and any gain/loss calculations will be based off the calculation between the $56,580 price and the entered price on the Crypto Withdrawal.

Prepare underlying data for FMV mark to market

Another popular use case of the Unused Cost Layers page is to use as a means for the underlying data necessary for any mark to market or impairment treatments to current crypto holdings. This table allows a user to review the existing cost layers that have not been picked, and to create adjusting  Journal Entries to reflect Fair Market Value representation of Crypto Assets in reporting.

For example, if I want to review the Cardano (ADA) holdings within my system at a reporting time (e.g. end of month or year) to be able to then create an adjusting journal entry to capture the unrealized gain/loss on a held crypto asset, I can do so with the data in the unused cost layers table.

First, filter the data for ADA:


From the filter, I can see that I have 12 remaining cost layers of Cardano, each with its own Price representing the cost basis (book value). To make calculations from here easier, I export the above filtered table to excel:

Within the excel table, I calculated a few fields to better identify the Book Value (Price*Quantity Available) and Fair Market Value (Current Market Rate * Quantity Available). This practice gives me the Book Value and Fair Market value at the transactional level for each remaining cost layer of ADA. From there, a user can book a reversing Journal Entry in the Financial module to reflect the difference between the Book and FMV value of the Asset, and code that entry to the ADA Asset Account and an Unrealized Gain/Loss Account for ADA that they have set up. The Posted Date for the Journal would be the date of the reporting period (e.g. December 31st, 2022), with the reversing date being the next day, which falls outside of the reporting period (e.g. January 1st, 2023):


Example of Mark to Market for ADA from Unused Layers

Disclaimer: This is not accounting advice. SoftLedger performs as a software provider, displaying examples of functionality in the system through these support articles. These details should not be taken as guidance. For your proper accounting treatment and guidance, be sure to consult your accounting advisors.