Acquisition (Initial Measurement)

Whether holding or disposing of crypto assets, it is necessary to calculate the returns or losses of the assets based on their acquisition costs. To ensure accurate allocation of acquisition costs, you need to provide complete data on crypto asset transactions.

Which transactions belong to acquisition?

There are many transactions with crypto asset inflows in the trading data, but not all inflow transactions are considered as acquisition of crypto assets. Most of the inflow transactions of crypto assets, such as purchasing crypto assets, receiving income paid in crypto assets, borrowing crypto assets, investor funding and receiving airdrops, belong to acquisition. According to ASU 2022-03 (Fair Value Measurements of Equity Securities Subject to Contractual Sale Restrictions), contractual sale restrictions are not considered when measuring the fair value of securities. For restricted crypto assets (such as crypto assets restricted by staking protocol), the process by which they change from a restricted state to an unrestricted state (such as unstaking) only changes their restriction attributes in accounting substance and does not change their control rights over them. Therefore, these types of transactions do not belong to acquisition.

The following diagram shows elven's classification criteria for determining whether a activity constitutes the acquisition of crypto assets:

Record acquisition cost

Accounting standards require assets to be initially recognized at fair value. According to ASC 820-10-30-3, in most cases, the transaction price equals fair value. When acquiring crypto assets, the transaction price is considered as the initial cost of acquisition for measurement purposes. According to ASC 350-60-30-1, transaction costs related to acquiring crypto assets such as commissions and other relevant fees are recognized as expenses when incurred.

In Elven, every transaction for acquiring crypto assets will record information such as asset type, time, quantity, and acquisition price. The commissions and other related expenses generated during the process of acquiring crypto assets will be recorded separately and not considered as part of the cost of acquiring the crypto assets.

Every acquisition transaction records corresponding cost information.