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CA Final · Financial Reporting · Accounting and Technology

Sagar Pharma Ltd purchased a cryptocurrency for Rs 50 lakh as an investment to hold for price appreciation, not in the ordinary course of business. At the reporting date the market value is Rs 62 lakh and the asset is traded in an active market. Under the prevailing Ind AS view, which treatment is appropriate if the entity applies the revaluation model of Ind AS 38 and no earlier revaluation exists?

The Rs 12 lakh gain is recognised in other comprehensive income as revaluation surplus. Held-for-investment crypto is treated as an intangible asset under Ind AS 38, and with an active market the revaluation model allows a first-time increase to be credited to OCI.

  1. ACarry at Rs 50 lakh and disclose fair value only
  2. BRecognise Rs 12 lakh gain in other comprehensive income and revaluation surplusCorrect
  3. CRecognise Rs 12 lakh gain in profit or loss
  4. DTreat as cash equivalent and recognise Rs 12 lakh in profit or loss

Explanation

Crypto-assets held for investment are not cash, financial instruments or inventory, so they are intangible assets under Ind AS 38. With an active market, the revaluation model is permitted. The first increase of Rs 12 lakh (62 minus 50) goes to OCI as revaluation surplus. Taking it to profit or loss would apply only if it reversed a prior revaluation decrease.

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