Such additional costs incurred in training and development are also capitalized and is amortized over the remaining life. When a firm recruits an employee, he is employed with the obvious expectation that the returns from him will far exceed the cost involved in selecting, developing, and training in the same manner as the value of fixed assets is increased by making additions to them. If the useful life is recognized to be longer than originally expected, revisions are affected in the amortization schedule.
If the human assets are liquidated prematurely, the whole of the amount not written off is charged to the income of the year in which such liquidation takes place. This is the oldest method of valuation of human resource. Historical Cost Method was introduced by Brummet, Flamholtz and Pyle. These costs include the cost of recruitment, selection, training, placement, and development of human resources of an organization. The sum total of all the costs related to human resources is calculated to find out the value of a human resource.
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