NFTs on the balance sheet: cost, impairment and creator royalties

NFTs sit outside ASU 2023-08's fair value model. Holders track each token at cost less impairment; creators face ASC 606 royalty questions.

2026-10-17 · 4 min read

If your company holds NFTs, the fair value rules that now apply to bitcoin and ether do not apply to them. Each NFT needs its own cost record, an impairment process, and, if you created the collection, a revenue policy for primary sales and secondary-sale royalties.

Why NFTs are outside ASU 2023-08

ASU 2023-08 requires fair value through net income only for crypto assets that meet six criteria, one of which is that the asset is fungible [1]. Non-fungible tokens fail that test, so they fall outside the standard [1]. The Journal of Accountancy explains the reasoning: it is hard to find market prices for unique digital assets that meet the fair value measurement requirements of ASC 820 [2].

The FASB's November 2025 project to widen the scope of Subtopic 350-60 targets wrapped tokens and receipt tokens; the published summary of that project does not mention NFTs [6]. As of October 2026, NFTs remain outside the fair value model.

The holder's model: cost less impairment

Out-of-scope assets go back to the traditional intangible asset guidance or another model that fits the rights involved [1]. For most NFTs held by a company, that means cost less impairment: the token is recorded at cost, written down when fair value falls below carrying amount, and never written back up under US GAAP [2].

Under IFRS, the IFRS Interpretations Committee's 2019 decision placed cryptocurrencies in IAS 2 if held for sale in the ordinary course of business and otherwise in IAS 38 [5]. That decision addressed cryptocurrencies, but the same framework is commonly applied to NFTs. IAS 38 allows a revaluation model only in rare cases where fair value can be determined by reference to an active market [7], which a one-of-one token will seldom have. IAS 38 also allows impairment reversals, unlike US GAAP.

Before recording anything, read what the token actually gives you. Deloitte notes that NFT purchases can bundle several elements, such as a digital item, physical goods or memberships, and that cost may need to be allocated across them [3]. A token that is really a ticket or a service right may not be an intangible asset held for its own sake at all.

Specific identification is the only practical lot method

Because every NFT is unique, there is no pool to average and no first-in, first-out to apply. Each token is its own unit of account, identified by contract address and token ID. Cost includes the purchase consideration measured at fair value, and policy decides whether directly attributable costs like gas or buyer fees are capitalized. When you sell, the gain or loss is proceeds less that token's own carrying amount.

Creators: primary sales and royalties

A company that mints and sells NFTs as part of its ordinary activities will usually be within ASC 606 [3]. The hard questions are which promises are distinct performance obligations and how to allocate the price among them [3].

Secondary-sale royalties are a separate issue. Deloitte highlights the sales-based royalty exception, under which royalty revenue is recognized when the later resale happens rather than estimated up front [3]. Whether the exception applies depends on whether the NFT is a license of intellectual property, which is a judgment. Royalties are also less certain than they look: the ERC-2981 royalty standard only signals who should be paid and how much, and it states that payment is voluntary for marketplaces [4]. Recognize what you actually receive, not what the contract metadata advertises.

Valuation evidence for impairment

Collection floor prices, recent sales of comparable tokens and trait-based pricing are all used as impairment indicators, but each is thin evidence for a single unique asset. Document what you used, the date, and why it is representative. A floor price for a large collection may say little about a rare token, and wash trades can distort recent sales.

What to do

• Keep an NFT register keyed by chain, contract address and token ID, with cost, acquisition date and the rights each token carries.
• Write down a policy for capitalizing gas and marketplace fees, and apply it consistently.
• Run an impairment review each reporting date, with dated pricing evidence per token.
• If you create NFTs, document the ASC 606 analysis: performance obligations, license type and the royalty recognition policy.
• Reconcile royalties received on-chain against marketplace reports, since marketplaces may not pay them.

Sources

1. FASB Issues Final Standard on Crypto Assets (Deloitte (DART))
2. New crypto accounting rules may spur early adoption (Journal of Accountancy (AICPA))
3. The Metaverse — Accounting Considerations Related to Nonfungible Tokens (Deloitte (DART))
4. ERC-2981: NFT Royalty Standard (Ethereum Improvement Proposals)
5. Holdings of Cryptocurrencies (IFRS Foundation)
6. FASB Adds to Its Technical Agenda Another Project on the Accounting for Crypto Assets (Deloitte (DART))
7. IAS 38 Intangible Assets (IFRS Foundation)

General information for finance teams, current as of publication. Not legal, tax or accounting advice.

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