If Talented Employees are a Company's Most Valuable Assets, Why Aren't They Reported on the Balance Sheet?

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Trần Thị Phương Anh – 18/05/1984
Individual Assignment (for women)
Topic: Discuss the following statement: “Talented employees are the company’s most valuable assets, why accountants do not report it on the balance sheet?”

In Financial Accounting, according to Needles & Powers: “The balance sheet presents a view of the business as the holder of resources, or assets, that are equal to the claims against those assets. It has three elements: assets, liabilities, and stockholders’ equity.” (p.17). The assets always equal the sum of the liabilities and stockholders’ equities. It is known as the accounting equation. Needles & Powers also have definition of ASSETS: “Assets are the economic resources of a company that are expected to benefit the company’s future operations.” Future economic benefits are controlled by the entity, as a result of pass transactions or other past events. Control is the ability of an entity to benefit from the asset and to deny or regulate the access of others to that benefit. There are many kinds of assets: current assets, long-term investments, PPE (Property, Plant, and Equipment), intangible assets. To be recognized as an asset in the statement of financial, it has to satisfy two criteria: probable future economic benefits and reliable measurement. Firstly, it is probable that the future economic benefits embodied in the asset will eventuate. To determine whether to recognize an asset, the degree of uncertainty must be considered that attaches to the flow of future economic benefits from that particular asset. If it considers that it is more rather than less likely that future economic benefits will eventuate, then this criteria of the recognition will be satisfied. . Secondly, it possesses a cost or other value that can be measured reliably. The appropriate measurement basis for an asset will depend on the model of accounting being applied. In most cases, assets will have a cost or other value...
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