On January 1, 2025, MicroStrategy adopted FMV reporting, leading to a substantial adjustment in its financial statements. On the company’s website and in their 4th Quarter Financial Results for 2024 (link below), the company reported:
“On January 1, 2025, we adopted ASU 2023-08. ASU 2023-08 requires us to measure our Bitcoin holdings at fair value in our statement of financial position, with gains and losses from changes in the fair value of our Bitcoin recognized in net income each reporting period.”
“As a result of our adoption of ASU 2023-08, as of January 1, 2025, we are required to apply a cumulative-effect net increase to the opening balance of our retained earnings of $12.745 billion.” [source]
This adjustment demonstrates the financial significance of FMV reporting, allowing companies with substantial digital asset holdings to accurately reflect their value on balance sheets.
Without this change, companies would continue to understate the true worth of their assets in a rising market, resulting in a potentially misleading situation, however unintentional, regarding their financial health that can confuse investors.