Discussion
Discuss the following issues as they relate to BBC and provide the appropriate FASB Concept Statement references. Create a clear and organized paper that accomplishes the goals of the assignment, employs appropriate tools (FASB Concept Statements), and demonstrates your strategy for solving the problem, implementation of the strategy to solve the problem, and a defensible and appropriate solution to the problem. Provide the appropriate references and use proper grammar and punctuation. See attached rubric.
Buff Branding Co. (BBC) spent a large sum of money to train its employees so that they can be productive workers. Such expenditures are referred to as investments in human capital.
A. Do you think that BBC's trained employees meet the definition of an asset? In your answer, discuss the characteristics of an asset and whether you think they meet each of those characteristics.
B. Most accountants would say that human capital is valuable, but that it is difficult, or even impossible, to measure the value of human capital. Given that you cannot determine an amount to place a value on the BBC's employees, but you think that they are assets, what should you do according toSFAC No. 5? Should you report them as an asset in the company's balance sheet? Explain.
C. If a value can be estimated for BBC's trained employees and included in the assets reported in the balance sheet, discuss the decision usefulness of this information in terms of the fundamental qualitative characteristics of relevance and faithful representation.