The Human Resources of any company are very important, especially at the management level.
They are the most productive assets of every company. They help in the proper control of other
assets in order to achieve corporate objectives.
Their activities must be carefully captured, recorded and quantified for balance sheet purposes.
They are paid salaries, because of the income that their activities generate for the company.
The Human Resources of a company may be accounted for using the present value of the future
salaries estimated to be paid to the management staff. The total amounts calculated to retirement
should be indicated in the balance sheet. The value should be amortised like the cost of other
fixed assets are depreciated.
Most companies find it easier to quantify land and buildings, plant and machinery, fixtures and
fittings and motor vehicles. They are fixed assets, which often appear in the company's balance
sheet. Human assets are also fixed assets. They do not only generate income for the company,
they are also charged with the responsibility for monitoring and keeping other assets.
Human assets are the main determinant of success in every company and hence the main assets
of any company. It is always a misrepresentation on the part of the company not to include
human assets in its balance sheet. It is understood that the costs of human assets cannot be easily
quantified and that is why companies hesitate to include it in their balance sheets.
The main purpose of this article is to provide a means by which human assets can be carefully
quantified for balance sheet purposes. An important asset of the company, such as human assets
should not for any reason be excluded from the company's balance sheet.