"Employees are your most valuable assets. They are the heart and guts of a company." Carlos Ghosn, the disposed chairman and CEO of the Renault-NissanMitsubishi Alliance, once said. However, employees are not listed as an asset in the statement of financial position of the company. Required: Using the definition and recognition criteria of an asset under the conceptual framework of the Australian Accounting Standard Board (AASB), explain whether employees are considered assets of a company. (8 marks)

AASB 138 definitions

Asset:A resource:

controlled by an entity as a result of past events;and

from which future economic benefits are expected to flow to the entity.

Intangible asset:An identifiable non-monetary asset without physical substance.

Identifiable:An asset is identifiable when it:

(a)is separable - ie can be separated or divided from the entity and sold, transferred, licensed, rented or exchanged, either individually or together with a related contract, asset or liability;or

(b) arises from contractual or other legal rights.