There is much debate as to whether the human resources of an organization can be considered as an asset and treated accordingly in the accounting system. There are two schools of thought. One says that human resource is an asset and the other does not agree with this. Now let us see what is an asset? Asset is anything which is owned by the entity to derive service in future and should have legally enforceable claim. As such there is no guarantee of deriving benefits from the existing
Human resources in future and has no sales value like other assets. Therefore, legally, human resource is not an asset claims one school of thought. Besides, company law also does not consider it as an asset. But the other school is of the opinion that the "human …show more content…
Thus, investment refers to expenditure on new plant and machinery, capital equipment, physical construction of new buildings together with any change in the stock of goods produced. There are two basic determinants of investment.
(i) The expected rate of profit which the business hopes to realize from investment, and
(ii) The rate of interest.
The level of investment is guided by the level of expected profits. Firms will invest, only if it is profitable. Further an important cost associated with investment is the cost of borrowing capital, which is the rate of interest. Of these two, the expected rate of profit is more influential than the rate of interest.
Cost of Hunan Resources
As human resource is considered as an asset, any expenditure incurred in the acquisition and accumulation of human resource will be treated as an investment. Cost of human resources represents sacrifice that will have to be incurred today to acquire and develop people in future. The cost of human resource otherwise called Historical cost of human resources is the investment in
Human resources which has both Revenue (expense) and Capital (asset) components. This cost may be classified as …show more content…
It includes the expenses incurred on recruitment, selection; entire cost is taken into consideration including those who are not selected.

a) Recruitment cost: It is the cost incurred to identify sources of human resources both from within and outside the organization. For example, cost of recruiting materials, administrative expenses, advertising costs, agency fees, recruiter’s salary and travel and outstation costs.

b) Selection cost: It depends on several factors such as the type of personnel being recruited and the method of recruitment. The cost of selection depends on the position for which a person is being selected. The higher the position, the greater is the selection cost. It includes cost of application blanks, administrative cost of processing applications, conducting tests, interview, medical examination and the Salaries, materials and consulting fees of the selectors.

c) Placement cost: In deciding upon the placement, the individual's ability, attitude, interest, temperament and aspirations are taken into consideration with reference to the job requirements. The cost of placement can be collected for the purpose of human resource