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INTELLECTUAL CAPITAL AMORTIZATION

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Author(s): D. Kokhno

Journal: Economics of Development
ISSN 1683-1942

Volume: 67;
Issue: 3;
Start page: 93;
Date: 2013;
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Keywords: intellectual capital | human capital | structural capital | customer capital | social capital | amortization

ABSTRACT
The intellectual capital as well as physical, while in use tends to experience depreciation and amortization. Under amortization of intellectual capital we understand the process of transferring the cost of intellectual capital to the cost of products made with this capital. However, in spite of the intangible nature of intellectual capital, there are some peculiarities of its depreciation: 1) while in use the capital does not always depreciate, losing its cost, but, can sometimes multiply (accumulate); 2) depreciation of intellectual capital does not depend on period of its use. Since the intellectual capital has a heterogeneous structure it’s more reasonable to consider its depreciation in terms of components – human, structural, customer and social capital.Thus, the elements of human capital subjected to depreciation are considered to be a human and his knowledge (inseparable from a human being). Regarding structural capital, the human knowledge materialized in intellectual products is subjected to depreciation. The depreciation of customer and social capital becomes apparent in the destruction of relations. In the first case it will be relations of our company with customers and resource suppliers. In the second one – relations between company’s employees. Hence, it appears that intellectual capital is subjected to both physical and moral depreciation.However, intellectual capital possesses inherent feature not only to depreciate in the process of manufacturing, but on the contrary, to multiply (increase in cost). Some of its components can accumulate at the same time with simultaneous depreciation of others. Considering this, we can talk about the multidirectional movement of intellectual capital that appears itself to be an obstacle to measure its depreciation. Still, in management of intellectual capital in a company this aspect should be taken into account, especially during the amortization policy. The mechanism of reproduction of the intellectual capital in a company should include the formation of the following special funds: initiatives, staff development, and creation of innovations, each responsible for reproduction of a particular intellectual capital component.
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