Right When Tesla Is About To Take An Impairment Charge On Its Bitcoin Holdings Elon Tweets This
Right when it looks like Tesla will be hit with an impairment charge on its bitcoin holdings, Elon Musk tweets the following:
Remember, Tesla will account for its bitcoin assets as indefinite-lived intangible assets. This means the bitcoin assets are recorded at costs and will then be remeasured on the balance sheet if an impairment occurs.
We don’t know exactly what price Tesla bought its $1.5 billion bitcoin stake at so it will be hard to tell when an impairment charge would be taken. Given the timing of Elon’s tweet it is likely bitcoin was acquired around the $35,000-40,000 range. Any price drop below the initial acquisition price would result in an impairment of the asset according to our reading of the GAAP accounting rules.
Sure, the tweet Elon shot out might just be coincidence or “internet meme culture”. But the timing of the collapse combined with a potential impairment on the balance sheet seems more likely. Elon is going to want to avoid having Tesla take any impairments so his stock price continues to go up and he gets fat bonuses to throw into his other business ventures.