"Really Vague": Tesla's Bitcoin Dump Leaves Accounting Mystery In Its Wake

ndtv.com:

"Teslas disclosure is really vague and not transparent," said an accounting professor.

Tesla Inc. made waves this week when it announced that it had dumped the bulk of its Bitcoin stash. Selling 75% of its cryptocurrency gave the company a one-time cash infusion, Elon Musk's electric car company said, but the battered value of its remaining Bitcoin also dinged profits.

Exactly how crypto helped and hurt Tesla's bottom line is difficult to disentangle, however, based on what it told the public on earnings day. Current accounting rules — or lack thereof — play a big role.

“Tesla's disclosure is really vague and not transparent,” said Vivian Fang, accounting professor at the University of Minnesota's Carlson School of Management. “It is very difficult to realize exactly what is the realized gain and what is the impairment charge.”

This is what we know, based on the company's shareholder letter: The sale added $936 million in cash to its balance sheet, but impairments impacted the company's income. The company's remaining pot of digital assets as of June 30 was worth $218 million, a reduction of more than one billion dollars from the previous quarter. The company booked a “depreciation, amortization, and impairment” charge of $922 million, but it didn't break out what's captured in that figure. The 30-page slide deck, of which nine are pictures, mentions Bitcoin twice.

Listeners to Tesla's earnings call on Wednesday got a little more color, but not much. Chief Financial Officer Zachary Kirkhorn told analysts that the gain the company realized in selling Bitcoin was offset by an impairment charge, “netting a $106 million cost to the P&L,” referring to its profit and loss statement. Tesla recorded the charge in the expense line