HUMAN RESOURCE ACCOUNTING
Total value of Human Capital is to be found out by
Assuming all employees are starting from that age group (i.e. starting from same age) and end at the last age.
Multiply average earnings with PVF.
Multiply the present value earnings with total no of employees.
Aggregate all present values to get value of Human Capital of a particular category.
ECONOMIC VALUE ADDED (EVA)
EVA = Net Operating Profit After Tax – Weighted Average Cost of Capital
= NOPAT – WACC
Where :-
NOPAT = PAT + Interest (+/-) Extraordinary Items
WACC = (Equity/Cap Emp) * Ke + (Pref Shares/Cap Emp) * Kp + (Debt/Cap Emp) * Kd
Where:-
Ke = Cost of Equity = Irf + Beta ( Irm – Irf)
Kd = Cost of Debt = [Interest(1-Tax Rate)/Long Term Borrowings] * 100
Note :
If multiple Beta are given take Highest
Capital Employed = Assets – Outside Liabilities (or) Total capital i.e Equity + Pref + Debt
If market capitalization is given for equity that amount shall be considered for calculating rate of WACC on total capital employed. However while calculating WACC we take book value of equity.
FUND BASED ACCOUNTING ( NON PROFIT ORGANISATION)
Statement of Income and Expenditure
Shall be prepared for Unrestricted fund and Restricted Fund.
Restricted Funds receipts shall be accounted to the extent it is used.
Transfers shall be separately presented.
Statement of Changes in Fund Balance
Balance shall be arrived by Opening Balance + Additions – Deductions (+/-) Transfers.
It shall be prepared for various funds Restricted funds, Endowment , Development funds etc.
Individual Balance sheets shall be prepared for each fund and a general balance sheet shall be prepared for Unrestricted funds.
Notes:
Advances paid for purchase of land and payments to contractors for construction of buildings shall be shown directly in Balance sheet.
Assets completed shall be transferred to general / unrestricted fund.
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