Valuing Human Capital: Inclusion of Human Assets in the Balance Sheet
Added on 2019-12-04
10 Pages3022 Words148 Views
|
|
|
Accounting for intangible assets: Current issue -should Human capital be recognised asanintangible asset in the balance sheet
TABLE OF CONTENTSINTRODUCTION......................................................................................................................3Description of intangible assets..............................................................................................3IAS regulations of intangible assets.......................................................................................4Current issue of the inclusion of the human capital as intangible asset into the balancesheet........................................................................................................................................5Conclusion..................................................................................................................................7References..................................................................................................................................9
INTRODUCTIONHuman Capital is becoming a significant factor for the growth and success of theorganisation. It is considered as most valuable intangible assets of corporations. However,traditional accounting practices don not categorized human resource capital as an intangibleassets on the balance sheet of an organisation (Radebaugh, 2014). With the continuoustransition from the industrial era to the information era, accounting practices should also betransitioned along with that. It seems that balance sheet could be outdated. This reportexplores the current issue on whether human capital should be classify as an intangible assetsinto the balance sheet. Further it will also discuss about the AIS regulations of intangibleassets.Description of intangible assetsAn intangible assets are those assets which don't have any physical existence. Theseare long-term assets of an organisation which are either developed internally or acquired in abusiness. It consists of corporate intellectual property such as, goodwills, patents, copyrightsand trademarks and etc. In case of acquisition or takeover of any company, these assets arerecorded at their fair value and if they are internally generated then they are recognised at thecost obtained in the development phase (Wang, 2014). There are two phases for thedevelopment of internally generated intangible assets; development phase and research phase.Development phase consists of all cost that is incurred before the establishment of assets. Theincurred cost in the development phase are capitalized, while in the research phase costincurred are expensed within the period of time. Research phase consists of all incurred costsof intangible assets before they get commercially feasible. The following are some examplesof intangible assets:Artistic-related assets: It consists of performance events, Musical works, Motionpictures, television programs and literary works (Christensen and et.al, 2015).Goodwill:When an organisation acquires another organisation then this intangibleasset is recognised. Goodwill represents the cost paid by acquired company to acquirer forthe purchasing of fair value identifiable assets.Marketing-related intangible assets:This can include Newspaper mastheads,Trademarks, Internet domain names and Non-competition agreements.Customer-related assets:These are intangible assets that consists of customer lists,customer-relationships and order backlog.3
End of preview
Want to access all the pages? Upload your documents or become a member.