How do you define human capital?

Question
How do you define human capital?

· What is the importance of human capital?

· What are the reasons to measure or not measure human capital?

With the rise of the ‘knowledge economy’, the traditional valuation of an enterprise as consisting solely of measurable assets, such as buildings, equipment and inventory, is increasingly being questioned. Human capital, although widely recognised as an important component of an enterprise’s total value, does not appear on a statement of financial position (balance sheet).

· Discuss whether or not you believe human capital should be included in the financial statements.

· Identify how you are defining human capital.

· What are some of the difficulties that may be encountered in attempting to quantify and record this (these) asset(s)?

· If recorded, would such values remain constant or be subject to change?

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