Historical Cost Model and the Need for a Universal Human Resource Model

Adewale Jamiu Arogundade, Kensington Onajero Ohwo, Solomon Ibrahim Audu


This study examines the practice of human resource accounting challenge of a non-universally accepted model to evaluate or measure human resource. Human resource have been shown by academic scholars as not being properly treated in the financials with one of the reasons for the occurrence of this is due to the fact that there are numerous models for measuring the value of human resource. It is therefore important to examine the issue of measurement of human resource before the level of proper recognition in the financial report. This study critically reviews the historical cost model.Expost facto research method was used with data gotten from audited financial reports of selected listed banks in Nigeria. Regression analysis was used to test the relationship between historical cost of human resource and disclosures information (profitability and total asset). The results of the analysis showed that there is a strong relationship between human resource cost and the statement of profit or loss and statement of financial position.The study recommended that the historical cost model be used in measuring staff cost as it is easy to use, conforms to the historical cost concept of the financials and is currently used in the financials and that human resource cost needs to be capitalized in the statement of financial position and amortized in the statement of profit or loss.

Keywords: Human resource accounting, Non-Current Asset, Total Asset, Profitability, Historical Cost Model

DOI: 10.7176/RJFA/11-17-14

Publication date:October 31st 2020

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ISSN (Paper)2222-1697 ISSN (Online)2222-2847

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