- April 19, 2012
- Posted by: essay
- Category: Sample essay papers
Taking into consideration the essence of intangible assets, it should be said that they are extremely complex to account for and it is really to account for them adequately and accurately. In this respect, it is possible to estimate that intangible assets are too vast and too complex. What is meant here is the fact that, being relatively new, intangible assets prove to be too complex to assess and evaluate them on the common ground. In fact, it is obvious that traditional methods and approaches to accounting do not always work in relation to intangible assets. In this respect, it is worth mentioning the fact that it is actually only goodwill that is considered to be relatively easy to account for (Hussey and Ong, 2000).
It proves beyond a doubt that such intangible assets as human resources or intellectual capital are extremely complex for they cannot be counted adequately in purely quantitative terms. Instead, it is necessary to have some system of the qualitative assessment of these intangible assets. In fact, this rule can be expanded on other intangible assets as well. In actuality, intangible assets are not material that makes them more complex than fixed and other material assets of the organization. In such a situation, it is impossible to measure precisely intangible assets. For instance, it is practically impossible to assess accurately then intellectual potential of human resources as well as human resources themselves. In other words, a company can study its human resources and their intellectual potential, but it never possible to forecast whether a prospective, gifted employee can be able to introduce an innovation which can improve the organizational performance consistently or not. In fact, in the modern business environment, cases when employees introduced innovations which revolutionized industry are not rare. At the same time, it is obvious that, while employing a prospective individual, a company cannot be sure that this employee will be able to implement his potential and that he will introduce such an innovation that can accelerate the organizational development or improve consistently the positions of the company in the market. Such lack of clarity and accuracy in the assessment of human resources is typical for other intangible assets, including intellectual potential, for instance. Hence, intangible assets prove to be too complex to be accounted for effectively.
At the same time, intangible assets are too vast to be accounted for. In this respect, it should be said that, unlike fixed assets, for instance, intangible assets are susceptible to considerable changes and, therefore, they are impermanent and unstable. For instance, the high personnel turnover can lead to a considerable change of a company’s human capital and its effect on the organizational performance. In this respect, it is worth mentioning the fact that one of possible effects of the high personnel turnover can be the loss of well-qualified, experienced professionals that can undermine the organizational performance. At the same time, it is difficult to measure the changes within human capital of a company not only due to its changeability, including qualitative changes, but also because human capital enrolls the entire organization and it is impossible to account for human capital, without taking into consideration each employee working within the company. Hence, in order to assess and account for human capital, it is necessary to assess each employee, his contribution in the organizational performance that is extremely problematic, especially taking into consideration the size of modern organizations, such as multinational corporations. As a result, intangible assets turn out to be too vast to measure them adequately and accurately at a time and, what is more, they are susceptible to changes which can make the measurements made at a definite period of time, irrelevant within a short period of time.