accounting theory

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 to SFAC 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.

Goal and Objective 2.1: Critical Thinking Assessment Form

TRAIT	UNACCEPTABLE	ACCEPTABLE	EXEMPLARY
Ability to formulate an effective strategy for solving problems	Develops a strategy, but includes misconceptions about an important tool or framework need to solve the problem.	Develops a satisfactory strategy, but one or more key strategy elements related to the problem are missing.	Develops a complete strategy. Strategy includes all needed key elements to solve the problem.
Ability to implement an effective strategy for solving problems	Prepares problem analysis that includes fundamental misunderstanding of a tool or framework needed to solve the satisfactorily solve the problem.	Prepares analysis needed to solve the problem, but conclusions and/or recommendations lack depth.	Synthesizes an effective strategy to determine desired results and devise a coherent plan for solving the problem.
Ability to defend and support an appropriate decision	Data selection, analysis, and/or conclusions are not objective or logical.	Decision is appropriate and defensible. Data selection is appropriate and the analysis is sound but not creative.	Decision is appropriate and defensible. Data selection is thorough and thoughtful. Analysis extends beyond replication of textbook examples.