Methods of Human Resource Accounting
- Capitalization of Historical Costs Method.
- Replacement Cost Method.
- Opportunity Cost Method.
- Economic Value Method.
- Standard Cost.
- Cost-Benefit Method.
- Noin-Monetary Methods for HRA(Human Resource Accounting).
Human Resource costs (also known as Human Resource costing) are a crucial component of HR accounting. The human resource department has long been thought of as a cost center or fee burner. As a result, there is always a strong focus on cost reduction within HR. This is where the concept of Human Resource Costing comes into play.
Methods of Human Resource Accounting:
Capitalization of Historical Costs Method - The cost incurred in staffing, placing, and training are capitalized and written off through the useful life of the human resource.
Replacement Cost Method - The replacement cost method arrives at the cost of the asset considering the present-day cost of the asset.
Opportunity Cost Method - Selecting one assigns value to the employee on what the organization might be willing to pay them.
Economic Value Method - It calculates the cash inflow by an employee throughout their service period in the organization.
Standard Cost Method - It determines the total cost incurred in hiring, training and development of the particular employee.
Cost-Benefit Method - A cost-benefit analysis quantifies potential returns against the cost the organization incurs towards the employee.
Non-Monetary Method - Determining the behavioral changes that an employee undergoes throughout their tenure.