Page 83 - DCOM409_CONTEMPORARY_ACCOUNTING

Contemporary Accounting Amit Kumar Sharma, Lovely Professional University

Notes Unit 7: Approaches of HRA

CONTENTS
Objectives
Introduction
7.1 Cost Approach
7.1.1 Historical Cost Approach
7.1.2 Replacement Cost Approach
7.1.3 Opportunity Cost Approach

7.1.4 Standard Cost Approach
7.1.5 Present Value Approach
7.2 The Economic Value Approach
7.2.1 Monetary Measures for Assessing Individual Value
7.2.2 Non-monetary Methods for Determining Value
7.3 Measurement of Group Values
7.3.1 Managerial and Peer Leadership
7.3.2 Organisational Climate
7.3.3 Group Process

7.3.4 Satisfaction
7.4 Recording and Disclosure in Financial Statement
7.5 Summary
7.6 Keywords
7.7 Review Questions
7.8 Further Readings

Objectives

After studying this unit, you will be able to:
Describe the cost and economic approach of HRA
Measure group values

Illustrate the recording and disclosure in financial statements
Introduction

The biggest challenge in HRA is that of assigning monetary values to different dimensions of
HR costs, investments and the worth of employees. The two main approaches usually employed
for this are:
1. The cost approach, which involves methods based on the costs incurred by the company,
with regard to an employee.

2. The economic value approach, which includes methods based on the economic value of
the human resources and their contribution to the company’s gains. This approach looks

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