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BFA605 Semester 2, 2020 Assessment Item – Case Study Part 1 – Discussion Due 5pm Wednesday 12 August You will hear the most firms say: “people are our greatest asset”. However, they are rarely...

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BFA605 Semester 2, 2020 Assessment Item – Case Study Part 1 – Discussion Due 5pm Wednesday 12 August

You will hear the most firms say: “people are our greatest asset”. However, they are rarely recorded as such in the balance sheet. Whilst human capital is not commonly recognised in the balance sheet, clearly there are some economic benefits to be obtained from the skills and attributes of certain individuals. Prior literature shows that human capital has become a significant factor determining the success of an organization and superior human capital is associated with better firm performance (Crook et al., XXXXXXXXXXYou as an accountant, based on your interpretation of the Accounting Standards and Conceptual Framework, discuss “should human capital be included in the financial balance sheet?”

Some research papers have been provided that may be helpful. You may use these references in your submission if you choose, but are also encouraged to research more broadly and find your own references.


1. Prepare a discussion and address the question: “should human capital be included in the

financial balance sheet?”. In your response you should address both sides of the argument

(with appropriate references), before coming to your own conclusion. Please write the

discussion in a professional manner and you may use accounting terminology.

Note: please paraphrase your arguments, do not directly copy the arguments from research papers or online materials (which may lead to plagiarism and a breach of academic integrity).

  1. Your discussion should be referenced appropriately. References should be provided both in-

text and as a post-script to your discussion.

  1. Your discussion must not exceed 1,500 words (including references).

You will then be required to provide feedback to two or three of your peers, based on the rubric provided. You will be assessed on both your original submission and on the quality of your feedback, which will be evaluated by the teaching staff.

Submitting instructions on Part 1:

1) In this assessment, we will use a software called Peer Mark (which is located under Assessment item folder). Please first submit your discussion to Peer Mark – Under Content- Assessment - PeerMark- Submit here: PeerMark (submitting to Peer Mark is for the purpose of peer review).

2) Please then submit your discussion to the assessment dropbox- located under Assessments- Assignment part 1 case study (you will need to submit the SAME discussion assignment twice on MyLO, submitting to assessment dropbox is for the purpose of giving feedback).

3) Just a reminder that due to the peer review process, it is very important that there is nothing in your assignment that can identify you. Please do not include your name and student number anywhere in the document (including the file name).

4) Please note that because of the peer allocation process there will be no extensions for this assignment. Please do not attach a cover page!

Answered Same Day Aug 09, 2021 BFA 605 University of Tasmania


Ishmeet Singh answered on Aug 10 2021
118 Votes
Expansion of Commonwealth Bank in Asia
Finance: Financial Accounting
Should the human capital is to be included in the financials like balance sheet?
The financial statement demonstrates an actual condition associated with a /firm/family etc. at an instant of time. Let us take a very fine example from the family prospective only why would parents raise their children if they only consider them as a liability, if they consider them only a expense undermining their potential to generate the future cash flows based upon the investments done on their health, education & personal well-being. Similarly, taking the case of a dentist who has made an important investment from himself in his education in the form of both time and money, as per the conventional criteria of recording the balance sheet goes will assigns this investment a value of worth zero. Similarly, taking the case of a physician’s income statement it will clearly show his/her ability to earn a good handsome salary. Any financial institution would consider likely to lend him money based on his potential for future earnings. We will try & argue today putting strong and evident reasoning and will try to come up with the best possible results of whether to include human capital in Balance Sheet or not.
There has been a significant drift towards the integrated reporting practices which may switch the psychology of companies to think towards considering human capital can be intervened as a part of Balance sheet. Let’s take an example suppose if Lionel Messi leaves Barcelona will there value be the same? Jeff Bezos leaves Amazon? Business leaders often come &say that “people are a business' greatest assets”. In English HRM Manual they follow: “the employees of any organization, and their knowledge, skills and experience are considered as dominantly one of the organization’s assets” so they could be taken as a piece of tangible assets, knowledge & experience can be analogous as working capital or simply said as asset. The IFRS in its edition of International Accounting Standard IAS 38 speaks about intangible assets.
‘A resource controlled by an entity as a result of past events and from which future economic benefits are expected to flow to the entity’.
The Dutch Central Statistics Institute focuses on human capital and keeps their viewpoint in concu
ence with the OECD definition by considering them as an investment and derives GDP from them. They came up with the theory called replacement value:
 “Replacement value which is defined in terms of as the total cost incu
ed for a business to regain or to replace the staff with the exact same value. This fundamentally includes their recruitment and cost incu
ed in their appointment, training & development costs and other cost like costs for their dismissal (payroll salary, legal procedures).”
Infosys, the Indian big giant for IT services & business consulting firm...

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