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The net book value of the company’s digital assets as of December dropped to $327,000. A year earlier, this figure was $6.8 million.
PLBY Group, the parent company of Playboy magazine, said it suffered a $4.9 million loss from asset impairments in Ethereum (ETH) in 2022, according to its annual report. The company accepted the leading altcoin as payment for its NFTs from the Rabbitars collection released in 2021.
In 2021, the company received $7.8 million in digital assets from the sale of NFTs, but recorded a $1 million impairment loss at the end of the same year. At the end of 2022, the value of digital assets on Playboy’s balance sheet was $327,000.
“Our digital assets as of December 31, 2022 and 2021 consisted of Ethereum received from the sale of our non-fungible Rabbitar tokens. As of December 31, 2022 and 2021, the carrying value of our digital assets was $0.3 million and $6.8 million, respectively. The impairment charge on our digital assets for the years ended December 31, 2022 and 2021 was $4.9 million and $1 million, respectively.
The company explained that it accounts for its digital assets as “indefinitely durable intangible assets” that are subject to impairment if their fair value falls below their carrying amount at any time. Impairment losses that a company incurs on digital assets cannot be reversed even if the fair value of the assets increases after the impairment losses are assumed.
“The market price of a single Ethereum ranged from $964 to $3,813 during 2022, but the book value of each Ethereum we held at the end of the reporting period reflects the lowest price of a single Ethereum on the exchange at any time since it was received,” reads the statement.
Therefore, negative fluctuations in the market price of Ethereum can have a significant impact on the company’s earnings and book value, while price increases will have a positive impact on the company’s earnings only if the tokens on the balance sheet are sold at a profit, the report says.
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