Bernstein: Strategy's balance sheet will increase by $12.75 billion after adopting new accounting standards

Odaily reported that research and brokerage firm Bernstein analysts released a report stating that Strategy (formerly MicroStrategy) will increase its balance sheet by $12.75 billion after adopting the new FASB fair value accounting rules. Previously, the value of digital assets on the company's books had to be written down as an impairment loss when prices fell, but could not be adjusted upwards unless sold. However, starting January 2025, Strategy will adopt the new fair value accounting rules of the Financial Accounting Standards Board (FASB), resulting in a one-time $12.75 billion cumulative adjustment to retained earnings. Bernstein analyst Gautam Chhugani said in a Thursday report to clients that this change will allow the company to recognize the unrealized gains on its position for the first time. Under the new FASB rules and the provisions of the 2022 Inflation Reduction Act, the tax treatment of the held by Strategy remains uncertain, meaning it may require a special exemption from the IRS. ()