Abstract
Research background: Cryptocurrencies are a specific form of currency that has emerged with the rise of globalization and the Internet. At present, there are still no necessary guidelines to enable bitcoin to be accounted for uniformly, not even within the framework of the international accounting standards IFRS. Purpose of the article: That is to evaluate the possibilities of correct procedure in accounting for bitcoin according to applicable accounting regulations with identification of deficiencies and risks and overall impact on profit and loss statements and tax issues in reporting bitcoin, especially in income taxes and VAT. Methods: The evaluation will be performed using model examples that focus on the use of bitcoin in business. Four model examples: 1. bitcoin as a means of payment, 2. bitcoin extraction, 3. bitcoin speculation, 4. evaluation of bitcoin billing when paying salaries. For individual variants, income tax will be calculated according to valid regulations and any difference will be compared. Based on the synthesis of the obtained results of model examples, the reporting of bitcoin according to Czech accounting standards will be evaluated with subsequent recommendations for accounting entities and pointing out possible risks for reporting. Findings & Value added: If an entity wishes to use bitcoin in the course of its business, it may be advised to create appropriate analytical accounts or off-balance sheet records. This issue should be discussed and addressed in the legislation. This is a global issue, so it is necessary to pay sufficient attention to the uniform approach in accounting.
Highlights
Cryptocurrencies are a specific form of currency that has emerged with the rise of the Internet
The objective of the paper is to evaluate the possibilities of the correct procedure for accounting for bitcoin according to valid accounting regulations
If the entity wants to use bitcoin in its business, it can be recommended to create appropriate analytical accounts or off-balance sheet records and thorough creation of internal guidelines that will declare the exact accounting procedure, and at the same time document the inventory from a virtual wallet or blockchain
Summary
Cryptocurrencies are a specific form of currency that has emerged with the rise of the Internet. Such currencies use cryptographic encryption to confirm payments. They are accepted as a form of payment, but officially do not meet the definition of money. Stroukal and Skalicky (2018) describe bitcoin as: “A decentralized P2P network on the Internet, managing the history of payment transactions between their nodes. The basic unit of the transaction is bitcoin. The number of units of this "cryptocurrency" is limited and new ones are created by the mining process. The European Banking Authority (EBA) understands virtual currencies as a digital form of value that is not issued by a central bank or public authority or linked to a currency with forced circulation, but recognized by natural or legal persons as currency, and which can be transferred, deposited or traded by electronic means (European Parliament, 2016)
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