Is Employee Training an Intangible Asset?
Businesses train their employees for many reasons. Trained employees perform their job responsibilities more efficiently. Training prepares employees for future advancement opportunities. And companies who provide training for employees increase the bond felt between the employee and the employer. When companies consider the benefits of training their employees, they may wonder if they should record cost of training as an intangible asset.
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Employee Training
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Employee training takes many forms in the workplace. Some companies hire their own internal training staff to deliver training presentations and facilitate workshops internally. Other companies contract with third parties to provide training to employees. Some schools and training companies sponsor workshops, allowing anyone to participate. If the topics coincide with the training needs of an organization, it may send employees to these workshops. Also, as technology continues to grow in the workplace, more companies offer interactive training courses through the company's intranet. Companies typically set their training budget at the beginning of the year, determine which employees need training and evaluate the training options available.
Intangible Asset
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Intangible assets represent things that provide value to the business without taking up any physical form. Companies typically own the right to benefit from these assets. When the company acquires an intangible asset, it increases its total assets and total equity. All intangible assets appear on the balance sheet.
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Business Asset
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Properly trained employees serve as an asset to the business in many ways. Employees who complete job responsibility training understand what the company expects from them and how they need to perform their job. Employees who receive training beyond their own job benefit the company by adding an additional perspective to the company's position. Employees with training received outside the organization can share their knowledge with coworkers. Like other business assets, the training provides benefits to the company and occupies no physical space.
Financial Asset
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Business assets may not appear in the company's financial records, even if the company benefits from them. The company omits assets that provide uncertain future benefits from the financial assets. Instead these costs are expensed in the period realized. Employee training represents an asset with uncertain future benefits. The company invests in training with the anticipation of attaining future benefits. However, the employee may forget the knowledge gained from the training or leave the company, eliminating any benefit from the training.
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