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problim creater
Unregistered Trainee

13 Posts

Posted - Nov 29 2004 :  8:51:51 PM  Show Profile
Hi forum fellows

This forum is really very helpful and i think we (accountancy student) don’t need any tuition caz we can ask everything in this forum.

Can anybody please tell me that a human can be a asset for the business or not. if answer is yes then how the depreciation will be charged becaz nobody know the age of human and if he dye then what kind of accounting treatment will be used for him


label
Junior

United Kingdom
136 Posts

Posted - Nov 29 2004 :  10:22:31 PM  Show Profile  Visit label's Homepage
hi Problim

The correct spelling is "problem"

What a strange question, no you would not capitalise your workforce for the reasons you have stated!

I think irrespective of the resources available such as forums, you would benefit from tuition!

--------------------------
See Ya
:-)
Visit www.accountancystudents.co.uk
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sajjad_dar2000
Senior

United Kingdom
493 Posts

Posted - Nov 30 2004 :  12:42:46 AM  Show Profile  Visit sajjad_dar2000's Homepage
Good question.......My answer would be YES

I would explain it tomarrow caz now i havent got enough timeto explain it.



Edited by - sajjad_dar2000 on Nov 30 2004 6:17:54 PM
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maani
Partner

Pakistan
1159 Posts

Posted - Nov 30 2004 :  02:04:23 AM  Show Profile
human beings cannot be considered as an asset...

Ace
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gnome
Unregistered Trainee

8 Posts

Posted - Nov 30 2004 :  02:32:27 AM  Show Profile
"an asset is a resource controlled by the enterprise as a result of past events and from which future economic benefits are expected to flow to the enterprise"

an intangible asset is an identifiable non monetary asset without physical substance and should also comply with the definition of an 'asset' (as stated above)

so you cannot count 'human resource' as an asset which means you cannot capitalise or depriciate it. the same is with market share and customer loyalty etc (BPP)

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ali4u3
Senior

Pakistan
348 Posts

Posted - Nov 30 2004 :  03:40:01 AM  Show Profile
ohh..my friend sajjab darr ...plz tell us yarr...how can a human be a fixed asset inshallah it will help all of us to increase our knowledge

Never seek advice from a Chartered Accountant. They are trained to find problems not solutions.
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the_farhan
Semi Senior

Pakistan
263 Posts

Posted - Nov 30 2004 :  3:08:57 PM  Show Profile  Visit the_farhan's Homepage

salaam all,

dear friends, human resources r one of the most important asset for a company. the departments of HRM n personnel mgmt. r meant for managing all the affairs related to it. according to a survey report in USA, the managrs of HR get 70% of the entire salary budget of top US companies. [referrence: personnel management: by Flippo]

the CFO of johnsons&johnsons once said (i dont remember his name right now) that: "... n the company with best business people will win ... " [reference: same as above]

this highlights the importance of human resources. HR is considered to b intangible assets because it r the abilities n talent of the ppl (n not the ppl themselves) tht make the impact. company hires them for their abilities n exploits these abilities for the benefits of the company.

HR might not b considered in accounting exactly like other assets (eg cash) bcoz HR r non-material in nature. so they r not represented in any "accounts" form. rather, accounting treats them as an expense!!!! by creating payrolls, n salaries expenses, n etc etc etc. but the trend has started to change, specially in big multinationals.

i got to know from somewhere, in last few days, tht ICAP has arranged a seminar abt for highlighting the importance of HR n its utilization for benefits of company, n the director of human resource dept of a big multinational addressed it also.

many of us might know tht a new dimension in accounting is evolving, called Human Resouece Accounting (HRA). i read an article abt it in DAILY DAWN atleast 2-3 yrs back. so i dont remember it exactly, but, the definition of HRA was given as: HRA tries to evealuate the human resources, possessed by a company, in terms of $ amount ie monetary equivalence.

many of u might already know tht Unilevers Pakistan has just established a Day-Care centre for infant kids in the premises of the company!!! just to retain their valuable female members from resigning just bcoz of th kids

in short, HR r the most important resource of a company. many big companies have suffered bcoz of lack of good managers or inabilities of their workforce etc etc.



FARHAN

live, n let live ...
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problim creater
Unregistered Trainee

13 Posts

Posted - Nov 30 2004 :  4:51:48 PM  Show Profile
quote:

hi Problim

The correct spelling is "problem"

What a strange question, no you would not capitalise your workforce for the reasons you have stated!

I think irrespective of the resources available such as forums, you would benefit from tuition!

--------------------------
See Ya
:-)
Visit www.accountancystudents.co.uk



Well! i know the spelling of problem but i wrote problim so dont worry...........as for as strange question is concern, READ THE REPLIES.......i am still waiting for Sajjad Dar's respond

Problem Creater

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label
Junior

United Kingdom
136 Posts

Posted - Nov 30 2004 :  5:33:15 PM  Show Profile  Visit label's Homepage
What are you a spoof?

--------------------------
See Ya
:-)
Visit www.accountancystudents.co.uk
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sajjad_dar2000
Senior

United Kingdom
493 Posts

Posted - Nov 30 2004 :  6:14:57 PM  Show Profile  Visit sajjad_dar2000's Homepage
Hi PRO CREATER

In some cases human can be an asset. Few month ago Manchester United (Football club) and Rooney (football player) singed and agreement for five years. Manchester United paid him in millions and Rooney will play for the club. Now Rooney will appear as an asset in balance sheet of Manchester United or we can say Rooney is Asset for Manchester United.

Definition of Asset
Assets are right or other access to future economic benefit as a result of past transaction.

According to above definition Rooney is an Asset because: -
1) Right to future economic benefit...Rooney will play football for Manchester United and club will earn the revenue
2) Because of past transaction...Rooney paid (purchased) some time in past.

Here we assume that Manchester United signed Rooney for five years and paid him five millions. Now Manchester United cant put five million as an expense because five millions have been paid for five years therefore Rooney will appear as an asset. Not just the Rooney but also all top football players are asset for the club.

Depreciation
Because Rooney has been paid for five years (Asset) therefore five million will be expanded on to five years. Depreciation will be charged on the length of agreement not the age of Rooney. I think straight-line method will be used for the depreciation therefore depreciation charge will be 1 million per years (5 million over 5 years).

In the cause of Rooney’s death during the agreement period he will be treated same as other assets (disposal).




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problim creater
Unregistered Trainee

13 Posts

Posted - Dec 01 2004 :  6:00:11 PM  Show Profile
Thanks Sajjad for yur reply.............and all other forum member

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ali4u3
Senior

Pakistan
348 Posts

Posted - Dec 02 2004 :  03:34:31 AM  Show Profile
good yarr sajjad...nice example :)


Never seek advice from a Chartered Accountant. They are trained to find problems not solutions.
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sajjad_dar2000
Senior

United Kingdom
493 Posts

Posted - Dec 02 2004 :  5:01:57 PM  Show Profile  Visit sajjad_dar2000's Homepage
Not agreed wid sam........

Manchester United paid him (Rooney) five million at once they would not pay him anymore during the five years. They can not put that expense in any single year they have to expand five millions in five years. Football club (Man United) dont pay them (football players) salry they hire them for some period.

If you think FOOTBALL is asset than its wrong FOOTBALL is an expense caz you cant use football for long term.

anyway i am a student of ACCA part I & II and i know that still i havent got enough knowledge of accountancy. whatever i said above have been told by my teacher who is well qualified.


Regards

Sajjad Dar

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sajjad_dar2000
Senior

United Kingdom
493 Posts

Posted - Dec 02 2004 :  5:05:13 PM  Show Profile  Visit sajjad_dar2000's Homepage
i even can prove from ur reply that human can b an ASSET but i am so bussy now due to ACCA exams so i would discuss this after 13 december.


Sajjad Dar

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sajjad_dar2000
Senior

United Kingdom
493 Posts

Posted - Dec 02 2004 :  5:08:23 PM  Show Profile  Visit sajjad_dar2000's Homepage
Grounds the Soccor Team owns including Clothings, Materials used to play equipment that team uses for clean the ground for practice purpose, shoes,shin guards,socks,buildings for the team that it uses,Transport Van and all other material that team uses to keep in fit.
_____________________________________________________________________


All above things are expense except building and Van


Regards

Sajjad Dar

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Goodman
Senior

328 Posts

Posted - Dec 02 2004 :  6:30:20 PM  Show Profile
Dear Sajjad

I am content with your treatment of £5m transfer fees paid. I have a question which is a slight variation:

Suppose Rooney walked in Sir Alex ferguson's office and said, Hey I am a great player. Alex was convinced and he took on Rooney on a weekly wage of say £80,000. Now £80,000 outlay is a charge to P&L, but obviously no transfer is paid and the guy is an asset and could be sold off for £7 million pounds. Is there any way we can recognise this £7 Million pounds potential in the B/s.

I tell you why? I have never audited a football club, but I could see a potential tax planning opportunity. The Decpn. charge is notional and would be replaced by capital allownaces in tax comps. Only way we can claim Capital allowances is to recongise the asset, but under histroic cost convention we cant do that. However, what about the situation if we form a Manchester united TRUST (life tenant Trst). The trust signs wyne at no cost and then sells it off to United club, thereby united paying a £7Million transfer fees to TRUST on which it can claim capi. allowances. and the trust under an agreements lends the money back to united.

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Goodman
Senior

328 Posts

Posted - Dec 02 2004 :  6:42:25 PM  Show Profile
Please nobody mention FRS6 here. I know its grey but Tax planning is always a grey area.

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sajjad_dar2000
Senior

United Kingdom
493 Posts

Posted - Dec 02 2004 :  10:53:07 PM  Show Profile  Visit sajjad_dar2000's Homepage
Vist this link to view the BALANCE SHEET AND PROFIT/LOSS ACCOUNT OF Manchester United, you will notice that the players appeared as an asset in balance sheet

I think its now enough to support my post regarding HUMAN AS AN ASSET. In PROFIT/LOSS ACCOUNT you will see that manchester united showed an entry as DISPOSAL OF PLAYER (Assets).

http://ir.manutd.com/manutd/news/rns/2935442?id=1096264877nRNSa3451D

Since the end of the financial year we completed the acquisition of Wayne Rooney
from Everton. Wayne Rooney is a player whose skills we have admired for a number
of years and his performances at Euro 2004 only increased this interest. Our
plans were to bid for the player in Summer 2005, but Newcastle United's bid and
Everton's subsequent interest in selling him, forced us to accelerate our plans
or risk losing him. As a result we have now spent next summer's transfer budget
unless The net loss on disposal of players in the year was £3.1m. During the year we
terminated the contract of the player, Fabien Barthez, requiring a write off of
£2.6 million of unamortised intangible asset at the termination date on the 30th
June and a payment of £2.5 million in partial compensation for the remaining two
years of his six year contract. In addition, a provision was made against the
carrying value of Diego Forlan of £1.9 million at the year end, prior to the
sale of his registration in August 2004. These losses were offset by the sale of
Nicky Butt and further net income totalling £2.4 million being recorded in
respect of payments from Real Madrid for David Beckham, (for the progression of
Real Madrid in the Champions League competition), from Chelsea in respect of
Veron (for securing Champions League qualification through finishing second) and
from Blackburn in respect of Cole and Yorke (based on appearances and Blackburn
retaining Premiership status). players are disposed of to realise cash for re-investment. (taken from above link)


just look at the bottom part of this Consolidated Cashflow Statement, you would see Manchester United accounted players as a capital exopanditure.

MANCHESTER UNITED PLC
CONSOLIDATED CASHFLOW STATEMENT
For the year ended 31 July 2004
Notes
2004 2003
£'000 £'000

Net cash inflow from operating
activities 58,769 57,939
------- ------
Returns on investments and servicing of
finance
Interest received 1,169 316
Interest paid (112) (167)
------- ------
Net cash inflow from returns on
investments and servicing of
finance 1,057 149
------- ------
Taxation paid (11,052) (10,602)
------- ------

Capital expenditure and financial
investment
Proceeds from disposal of players'
registrations 8c 16,009 11,122
Purchase of players'
registrations 8c (44,813) (18,983)


Regards

Sajjad Dar

Edited by - sajjad_dar2000 on Dec 02 2004 11:09:26 PM

Edited by - sajjad_dar2000 on Dec 02 2004 11:20:41 PM
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Mr. Whappaaaa
Semi Senior

Pakistan
215 Posts

Posted - Dec 02 2004 :  11:13:38 PM  Show Profile
hmmmmmm ... STRANGE .
discussion is going on well... i think , in my point of view( may be i am wrong) that HUMAN may be an asset or employee of the organization, based on the judgement and definition of asset.But in this example( mentioned by sajjad ),HUMAN will be treated as an asset. SAM .... u said that asset must be owned, tu yes dear asset must be owned in that example but the life of this asset(ROONEY) is just five yrs(according to the length of agreement)..Simply assets are the Revenue generating product. If Manchestor dont agree to ROONEY then perhaps future economic benefit will not flow to the enterprice by Grounds,Buildings,Material or whatever u mentioned ... agree..??
quote:
Now if You just take the example of Football Players they wont be Assets of the Enterprise (club or team)they would be considered as Employees and the money they take for the YEARS period would be considered as Prepaid Salary Expense, that would certainly become expense with the period of time.


further more .. would u like to define me that what is the nature of PREPAID SALARY ....???????
chalo .... theek hai maan liaa k it is prepaid salary .. but this prepaid salary is considerd to be as a LONG TERM ASSET.



ASIF ALI
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sajjad_dar2000
Senior

United Kingdom
493 Posts

Posted - Dec 03 2004 :  12:52:50 AM  Show Profile  Visit sajjad_dar2000's Homepage
quote:

Yes ofcourse Prepaid Salary would be Asset .


quote:

We are considering Football players here in terms of Accounting Lanuage right... ? or r we considering them in General English Language





sam bahi kia mai nai kuch gulaat kahaa thaa ya kuch diffrent kahaa thaa.....topic was same CAN A HUMAN BE AN ASSIT? and my answer was yes and you wansnt agree.........

Sajjad Dar

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sajjad_dar2000
Senior

United Kingdom
493 Posts

Posted - Dec 03 2004 :  12:54:18 AM  Show Profile  Visit sajjad_dar2000's Homepage
THANK MR ASIL ALI for your support.


Goodman please visit following link hope it will work

http://ir.manutd.com/manutd/news/rns/2935442?id=1096264877nRNSa3451D


Sajjad Dar



Edited by - sajjad_dar2000 on Dec 03 2004 01:05:46 AM
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Goodman
Senior

328 Posts

Posted - Dec 03 2004 :  01:23:49 AM  Show Profile
Hey Sajjad

Please read my post carefully, I am trying to bring out a different issue and see if you can help answer that issue.

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sajjad_dar2000
Senior

United Kingdom
493 Posts

Posted - Dec 03 2004 :  01:40:18 AM  Show Profile  Visit sajjad_dar2000's Homepage
quote:

Hey Sajjad

Please read my post carefully, I am trying to bring out a different issue and see if you can help answer that issue.





Sorry Goodman i am not that good to reply your post. Your post show that you are well qualified and experience person and if you can’t solve this issue than how can I?

Regards Sajjad Dar

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Goodman
Senior

328 Posts

Posted - Dec 03 2004 :  4:46:35 PM  Show Profile
Hi Sajjad

I might be slightly more experienced than you are, but honestly reading your post this question crossed my mind and I thought you might be in a position to discuss it with your teacher. I know for sure that London teachers are partners of well established firms and we might have their opinion on this treatment. Anyhow if you do discuss please let me know or i come to know i will pass on the info. to you.
take care

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sajjad_dar2000
Senior

United Kingdom
493 Posts

Posted - Dec 03 2004 :  4:55:47 PM  Show Profile  Visit sajjad_dar2000's Homepage
quote:

Hi Sajjad

I thought you might be in a position to discuss it with your teacher. I know for sure that London teachers are partners of well established firms and we might have their opinion on this treatment. Anyhow if you do discuss please let me know or i come to know i will pass on the info. to you.
take care





Hi GoodMan,

I am not going to college these days because we are at end of our ACCA semester and preparing myself for exams. I have taken out the print of your post and as soon as I join the college I would discuss it to my teacher then let you know.


Regards,

Sajjad Dar





Edited by - sajjad_dar2000 on Dec 03 2004 5:20:49 PM
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smraza
Manager

Pakistan
852 Posts

Posted - Dec 04 2004 :  10:45:52 AM  Show Profile
While looking at the topic and the link of the footbal club's accounts, i got confused.
In the fin.statements of the club, there is no selling or purchasing of players, but the player's registerations, that is why the club has shown all the player's registerations as Intangible assets.
Therefore in my opinion, the human is the asset for the business due to his skills which he possess.

Why should we pick the example of any other country, just pick any financial statement of any company incorporated in pakistan. (Preferably those financial statements where u can see 'Operating lease')
Now look at the head 'Salaries and other benefits', in my opinion the payments in this head can be considered as "Lease Rental" for the use of assets. But the difference is that we cannot determine the total value and useful life of 'Human', thats why we cannot have the purchase option at the end of lease period.

SMR
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syedhassan
Semi Senior

Saudi Arabia
160 Posts

Posted - Dec 04 2004 :  1:18:10 PM  Show Profile  Visit syedhassan's Homepage  Send syedhassan a Yahoo! Message
hi all...
lovely discussion.....
i , also studied the balencesheet well.....

sure, there is a treatment as ASSETS for players, its correct
as we can see assets disposal,historic cost,

but i think the club treated CONTRACTS with players, as the ASSETS.....as, no purchasing of selling of prayers is clear...
SMRAZA if right here....

and the TREATMENT OF ASSETS, ALSO DEPENDS ON NATURE OF BUSINESS....
(WHAT ARE THE GOODS FOR A CO.\CLUB\PLC ETC.....

and each contract has...
-NBV
-disposal value
-duration and LIFE..
-HISTORIC COST...
REGARDS..
SYEDHASSAN...




ACCA
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syedhassan
Semi Senior

Saudi Arabia
160 Posts

Posted - Dec 04 2004 :  1:24:04 PM  Show Profile  Visit syedhassan's Homepage  Send syedhassan a Yahoo! Message
quote:

hi all...
lovely discussion.....
i , also studied the balencesheet well.....

sure, there is a treatment as ASSETS for players, its correct
as we can see assets disposal,historic cost,

but i think the club treated CONTRACTS with players, as the ASSETS.....as, no purchasing of selling of prayers is clear...
SMRAZA if right here....

and the TREATMENT OF ASSETS, ALSO DEPENDS ON NATURE OF BUSINESS....
(WHAT ARE THE GOODS FOR A CO.\CLUB\PLC ETC.....

and each contract has...
-NBV
-disposal value
-duration and LIFE..
-HISTORIC COST...
IN SHORT...
HUMANS ARE ASSESTS, BUT NON-ECONOMIC
AND...CAN BE ECONOMIC, BUT IT DEPENDS ON BUSINES NATURE.
REGARDS..
SYEDHASSAN...




ACCA



ACCA
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the_farhan
Semi Senior

Pakistan
263 Posts

Posted - Dec 04 2004 :  5:28:30 PM  Show Profile  Visit the_farhan's Homepage
quote:

Therefore in my opinion, the human is the asset for the business due to his skills which he possess.



i agree with this point. in fact, i ve tried to raise this point in my reply earlier. but i think it was not ellaborate enough. my point is tht human beings/ employees/ (HR) generate revenues for the company by their skills. they shud b treated as intangible assets. they r not just like other assets or like equipment or machines. these all r dumb. but human assets r intelligent assets.

one more thing tht i ve noticed is tht most of the ppl, even the most senior members, r taking this issue just in perspective of accounting. ie, the accounting treatments, the financial stmt. representations etc etc. i believe tht there is a lot more to businesses thn just accounting. it takes lot more to become successful business leader.

so i invite all the members, specially the experienced mmbr to whom v all look for suggestions, to view this issuse from other dimensions as well. i beleive tht, whatever way the accounting principles treat the human beings, human assets r infact one of the most important FACTOR for any company. now, call this FACTOR as an asset, or whtever name, but the underlying truth shall remain unchanged.



FARHAN

live, n let live ...
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syedhassan
Semi Senior

Saudi Arabia
160 Posts

Posted - Dec 05 2004 :  10:18:26 AM  Show Profile  Visit syedhassan's Homepage  Send syedhassan a Yahoo! Message
hi there...
what i meant was that...
its a vast and elaborate issue.....
as it depends on factors like:-
-business nature.
-contract nature
-its terms (long term etc.)
and then..
-the IAS's and POLICY govering them....for treatment
purposes.
so, here two issues and the FIRAT one must be
considered firs or in PREFERENCE to the other..
regards,..
syedhassan..

ACCA
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syedhassan
Semi Senior

Saudi Arabia
160 Posts

Posted - Dec 05 2004 :  10:20:32 AM  Show Profile  Visit syedhassan's Homepage  Send syedhassan a Yahoo! Message
hi there...
what i meant was that...
its a vast and elaborate issue.....
as it depends on factors like:-
-business nature.
-contract nature
-its terms (long term etc.)
and then..
-the IAS's and POLICY govering them....for treatment
purposes.
so, here two issues and the FIRAT one must be
considered firs or in PREFERENCE to the other..
regards,..
syedhassan..

ACCA
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