Incorporating the value of intangible resources into a company's financial position can pose challenges due to the
Question:
Incorporating the value of intangible resources into a company's financial position can pose challenges due to the difficulty in measuring them. However, it is crucial not to overlook the omission of these intangible assets because of the potential benefits they can bring to the company when included in the financial system.
In recent years, there have been efforts to assign a value to the human assets of commercial organizations with the aim of including them on the balance sheet. The question arises as to whether human capital should be considered as assets and whether they meet the criteria of a traditional asset for inclusion on the balance sheet. It has been argued that for human capital to be regarded as an asset, it needs to demonstrate the benefits of economic value, controllability, and reliable measurability.
These three factors - economic benefits, control, and measurability - play a critical role in facilitating the inclusion of human value into the intangible assets of the company:
1. Economic benefits: Human capital can be considered an asset if it offers potential future economic benefits to the firm.
2. Control: For human capital to be treated as an asset, it should be controllable like other assets. T
3. Measurability: Can the measurement of human capacity be reliably measured.
By considering these three factors, the company can facilitate the inclusion of human value into its intangible assets. Discuss.
Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw