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The role of human capital cost in accounting

Article Information:

Title:

The role of human capital cost in accounting

Author(s):

Hai Ming Chen, Ku Jun Lin

Journal:

Journal of Intellectual Capital

Year:

2004

Volume:

5

Issue:

1

Page:

116 - 130


ISSN:

1469-1930


DOI:

10.1108/14691930410512950

Publisher:

Emerald Group Publishing Limited

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Abstract:

The purpose of this research is to deal with the human capital disclosure issue of present accounting systems. Many companies nowadays derive their competitive advantages mainly from human capital. However, under generally accepted accounting principles, all human-related expenditures are treated as expenses, which are deductions of revenues, thus misleading decision-makers into inappropriate judgments. This paper provides an alternative way of measurement and disclosure of human capital items in financial statements. The paper defines and classifies the human capital of a company in line with a theoretical framework provided by the authors, sorts out company's human capital investments according to cost development stages in human resources, isolates human capital from expenses and finally suggests disclosure in financial statements.

Keywords:

Competitive advantage, Expenditure, Human capital


Article Type:

Research paper


Article URL:

http://www.emeraldinsight.com/10.1108/14691930410512950

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