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(Corrects typo in headline)
By Tom Wilson, Anna Irrera and Jessica DiNapoli
LONDON/NEW YORK, March 8 (Reuters) - Large companies from carmaker Tesla Inc to business intelligence firm MicroStrategy Inc have swapped billions of dollars in cash for bitcoin in recent months.
Yet hurdles remain for the quick dawn of a wider trend of major corporations holding bitcoin, from the cryptocurrency's volatility to reputational risk, financial chiefs and accountants told Reuters. Main story:
Here are some of the key questions over cryptocurrency bookkeeping and tax:
HOW DOES CRYPTO ACCOUNTING WORK?
The bookkeeping rules used by U.S. companies make no specific reference to cryptocurrencies such as bitcoin.
Under guidance from 2019 issued by the U.S. accounting trade body, companies account for bitcoin under rules for "intangible assets" such as intellectual property.
Companies record the value of bitcoin at the time of purchase in their accounts. If the price rises, they cannot log those gains until they sell. Yet if the value of bitcoin drops, the company must write down the value of their holdings as an impairment charge.
Outside the United States, where companies operate under a separate set of rules, crypto is accounted for differently.
Companies that own digital coins for sale as part of their normal business hold them as inventories at cost price. Others, such as broker-traders, can hold such inventories at market value, said the International Financial Reporting Standards Foundation, which sets rules for most non-U.S. corporations.
Other companies hold their cryptocurrencies as intangible assets, like in the United States. Yet they can reverse any writedowns back to original cost if the value of the coin rises again. In some other cases, companies that record crypto as intangible assets can gauge the value of their crypto holdings at market value.
WHAT DO TESLA AND OTHERS DO?
Most of the publicly listed companies that hold bitcoin on their balance sheets are specialist cryptocurrency or blockchain firms, according to Bitcoin Treasuries https://bitcointreasuries.org.
But last month, Tesla became the highest-profile mainstream company to shift some of its coffers to bitcoin from cash, making a $1.5 billion bet on the digital currency.
In a regulatory filing, it said the bitcoin would be accounted for as "indefinite-lived intangible assets", warning it could face impairment charges if their price falls.
MicroStrategy Inc, led by bitcoin proponent Michael Saylor, holds around 91,000 bitcoin. Its holdings are worth around $4.6 billion, according to a Reuters calculation.