With the growing emergence of the knowledge economy, the traditional evaluation of organization’s human resource has been a subject of intellectual controversy due to the recognition that human asset is an increasingly important part of an enterprise’s total value. Chen and Lin (2003:16) observed that the succession of the human intellect over machines and equipment in the contribution to industrial value makes a financial statement that relegates human asset expenditure to expenses inadequate if not obsolete. Hence, this paper discusses scholarly opinions concerning the treatment of human assets accounting and the valuation of corporate profitability. Drawing from literature that is already awash with scholarly thinking on the subjects, the paper reveals that the current method of relegating all the company’s inputs in human resources to expenses is misleading since it does not separate human capital investment from human capital expenses. The paper winds up on the note that Human capital investment relates to the long-term value creation aspirations of organization, as such must be identified, measured and reported appropriately in the books of account to eschew distortion of reported corporate profit.
- Human Assets Accounting Treatment,
- Corporate Profitability Evaluation,
- Human Resource,
Available at: http://works.bepress.com/chukwumah_obara/8/