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Procedia Economics and Finance 23 (2015) 792 – 796

2nd GLOBAL CONFERENCE on BUSINESS, ECONOMICS, MANAGEMENT and

TOURISM, 30-31 October 2014, Prague, Czech Republic

Intellectual Capital Cost Management

Tsertseil Juliya a*
a
Associate Professor, Department of Financial Management, Kazan Federal University, Kazan, Russian Federation

Abstract

The given work contains theoretical aspects of intangible assets value formation for enterprises in institutional economics. In the
age of market economy the device of enhancing an enterprise performance implies two trends: investment activities in a
conventional field and investment operations in innovation sector. Both trends mean the arrangements for formation of
tangible/intangible assets value what brings to efficiency factors development: minimizing cost of production of work and
services, enterprise profit and money flows maximization, capitalization of earnings and maximizing enterprise market value. As
an example the enterprises of the Tatarstan Republic chemicals sector were held up. The given enterprises implement integration
within the framework of upstream integration but in two aspects: natural (process plant integration) and within the context of
transaction expenses saving.In contexts of international economics globalization new financing sources in financial and operating
activities of enterprises become increasingly important under restrictions of production factors scarcity. As far as we know, labor
theory of value emphasizes three factors of production: land, labour, capital. Against the background of institutional economics
transformation of the first factor and detachment into the additional category such factor as «human capital assets» is taking
place. Initially it was mentioned in Adam Smith’s book «The Wealth of Nations» where human capital asset is thought of as the
generalized characteristic for quality and quantity of the human’s labour ability being key revenue source and labor productivity
growth promoting factor. Nowadays «the notion of «human capital asset» is understood as the body of knowledge, skills, abilities
(including creativity and mental ability), human incentives for productive labour acquired due to education, training or based on
practical experience and being of great economic value promoting growth in prosperity of certain economic entity and national
wealth as well.
© 2015
© 2014TheTheAuthors.
Authors.Published
Publishedby
byElsevier
ElsevierB.V.
B.V.This is an open access article under the CC BY-NC-ND license
Selection and/ peer-review under responsibility of Academic World Research and Education Center.
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
Selection and/ peer-review under responsibility of Academic World Research and Education Center
Keywords: Human capital assets, brain capital, intangible assets market value, intangible assets balance sheet value, goodwill, capitalization
factor, net assets, transaction expenses, transformational expenditures.

1. Introduction

In contexts of international economics globalization new financing sources in financial and operating activities

* Tsertseil Juliya Tel.: +7-987-2-969-969

E-mail address: zerzeil8811@mail.ru

2212-5671 © 2015 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
Selection and/ peer-review under responsibility of Academic World Research and Education Center
doi:10.1016/S2212-5671(15)00439-6
 Tsertseil Juliya / Procedia Economics and Finance 23 (2015) 792 – 796 793

of enterprises become increasingly important under restrictions of production factors scarcity. As far as we know,
labor theory of value emphasizes three factors of production: land, labour, capital. Against the background of
institutional economics transformation of the first factor and detachment into the additional category such factor as
«human capital assets» is taking place. Initially it was mentioned in Adam Smith’s book «The Wealth of Nations»
where human capital asset is thought of as the generalized characteristic for quality and quantity of the human’s
labour ability being key revenue source and labor productivity growth promoting factor. Nowadays «the notion of
«human capital asset» is understood as the body of knowledge, skills, abilities (including creativity and mental
ability), human incentives for productive labour acquired due to education, training or based on practical experience
and being of great economic value promoting growth in prosperity of certain economic entity and national wealth as
well». (Stewart, 1999). According to Khamidullin (2007), up-to-date interpretation of human capital asset implies
treating a human as a personality implementing his/her creative potential in various fields of activity. Human capital
asset presents a crucial impact on both transactional and transformational expenses saving. In the first instance
institutional and social capital take place and in the latter case the creative potential implies labour, knowledge based
and institutional capital of a personality.
In the age of market economy the device of enhancing an enterprise performance implies two trends: investment
activities in a conventional field and investment operations in innovation sector. Both trends mean the arrangements
for formation of tangible/intangible assets value what brings to efficiency factors development: minimizing cost of
production of work and services, enterprise profit and money flows maximization, capitalization of earnings and
maximizing enterprise market value.
For purposes of total cost management under current market conditions the terms «intellectual capital» and
«intangible assets» are equated. Because corporate activities involve complex system of intercommunication with
various economic agents and market institutes: suppliers, consumers, system of public authorities, financial
institutions, research institutes. Part of these factors comprises material base and in the process of analyzing
financial and economic activities of an enterprise can be estimated by quantity and quality value.
Thus the rights for industry property units and for engineering solutions unprovided with patent protection as
well as the rights for intellectual property and objects of allied rights can be assessed using three group of estimating
approaches: discounted cash flow method, Net Assets Value Method and the comparative method. Table 1 shows
the methods used in estimating от intangible value based on the above approach groups.

Table 1. Intangible Value Assessment Approaches.

Intangible Value Assessment Approach Method used in the approach of Intangible Value
Assessment
Discounted cash flow approach Surplus Profit Method.
Discounted Cash Flow Method.
Exemption From Royalty Method.
Net Assets Value Approach Cost of Creation Method.
Net Cost Profit Method.
Comparative Approach Capital Market Method.

At present to assess value it is desirable to apply combination of two methods: counting house attitude regulated
with normative legal documents of preparing financial statements at the enterprise and money value approach. The
latter implies consideration of factors forming intangible value being not reflected in the financial document of the
enterprise. In this case we mean such criterion as the firm’s goodwill. Goodwill presents intangible asset the value of
which reflects the advantages of this firm as related to asset-liability management quality in comparison with the
other analogous enterprises. Quantitative concept of such advantages is meant as acquisition of higher income per
unit of own capital invested in comparison with income of other enterprises in analogous production branches
related to disposal of commodities, works and services (Tsertseil, 2013).
Considering financial activities of Russian enterprises one can make notice of underestimation of intangible
value in these enterprises’ non-current assets estimation as is evidenced by the data given in tables 2, 3, 4.
794 Tsertseil Juliya / Procedia Economics and Finance 23 (2015) 792 – 796

Table 2. The share of intangible assets index in non-current assets structure of enterprises OJSC «Kazanorgsynthes» (KOS), OJSC
«Nizhnekamskneftekhim» (NNK) and OJSC «Nizhnekamskshina» (NSH) in 2009.

Index, thous. rub. OJSC KOS OJSC NNK OJSC NSH

Intangible assets 447 12140 3568
Noncurrent Assets 38400230 40189096 3081406
Intangible assets share in non-current assets structure 0.00001 0.0003 0.0012

Designation:
x OJSC KOS— Open joint stock company «Kazanorgsynthes»;
x OJSC NNK— Open joint stock company «Nizhnekamskneftekhim»;
x OJSC NSH— Open joint stock company «Nizhnekamskshina».

Table 3. The share of intangible assets index in non-current assets structure of enterprises OJSC «Kazanorgsynthes» (KOS), OJSC
«Nizhnekamskneftekhim» (NNK) and OJSC «Nizhnekamskshina» (NSH) in 2010.

Index, thous. rub. OJSC KOS OJSC NNK OJSC NSH

Intangible assets 484 117950 241
Noncurrent Assets 37385381 40763373 3158043
Intangible assets share in non-current assets 0.00001 0.003 0.0001
structure

Table 4. The share of intangible assets index in non-current assets structure of enterprises OJSC «Kazanorgsynthes» (KOS), OJSC
«Nizhnekamskneftekhim» (NNK) and OJSC «Nizhnekamskshina» (NSH) in 2011.

Index, thous. rub. OJSC KOS OJSC NNK OJSC NSH

Intangible assets 466 194667 40024
Noncurrent Assets 35852368 42700129 3230090
Intangible assets share in non-current assets structure 0.00001 0.0046 0.124

Therefore, total proportion of intangible assets in the given enterprises’ non-current assets structure is
inconsiderable apart from OJSC «Nizhnekamskshina» where the share of this index made 0.124. At the same time
these enterprises’ cooperation ties comprise practically all sectors of economy: general engineering, construction
operations, information and innovation technologies.
Financial and economic indicators of the given enterprises’ performance results are presented in Table 5.

Table 5. Financial and economic indicators for operating performance of such enterprises as OJSC KOS, OJSC NNK, OJSC NSH in 2011.

Indices, mln. rub. Sales receipts Net assets

OJSC KOS 33730.463 8574.646
OJSC NNK 122699.821 48454.081
OJSC NSH 22342 307

Fusion of enterprises into a unified complex is characterized as upstream integration with the result that forming
of petrochemical cluster on the territory of the Republic of Tatarstan takes place. Nowadays the cluster comprises
OJSC «Tatneft», OJSC «Tatneftekhiminvest — holding», «ТАIF –NK», OJSC «Nizhnekamskneftekhim», OJSC
«Nizhnekamskshina», OJSC «Chemical Plant named after L.Ya. Karpov», OJSC «Nizhnekamsktechuglerod», OJSC
«Kazan plant of synthetic rubber» and a number of other enterprises.
In institutional economics upstream integration reflects the device of displacing transaction expenses for
intracorporate transactions. Correspondence of market and intra-corporate transactions is shown in O. Williamson’s
diagram which considers the interdependence of the following indices:
1. difference in amount of expenses for intra -corporate and market management;
2. difference in cost value in the process of consumer goods manufacture within the firm frames and purchasing
costs in the process of goods acquisition on the market;
3. the uniqueness (specificity) of goods, works and services.
 Tsertseil Juliya / Procedia Economics and Finance 23 (2015) 792 – 796 795

Let us draw summarizing conclusion of the model: the higher the extent of the assets specificity the higher the
profits of intracorporate management versus marketing management (Auzan, 2005).

Now let us calculate goodwill value of the enterprise OJSC «Nizhnekamskshina» in the year of 2012 by means
of capitalization of the enterprise earning power. Basic and calculation data are presented in table 6. The enterprise
OJSC NSH goodwill value calculation

Table 6. Goodwill value of the enterprise OJSC «Nizhnekamskshina» in the year of 2012 by means of capitalization of the enterprise
earning power

Index, thous. rub. Index value

Net assets market value 373000
Normalized net earnings (Return on Average Assets 0.15) 68942
Anticipatory profit 55950
Surplus profit 12992
Surplus profit value (capitalization rate 0.06) 216533
Goodwill value. 589533

As it is seen from the table 6 underestimation of intangible assets value at the enterprise OJSC
«Nizhnekamskshina» in 2012 made 589, 533 million rubles. While balance sheet value of intangible assets made
27469 thousand rubles and in total amount of non-current assets it equals 0.0074. Calculation data are presented in
table 7.

Table 7. The share of intangible assets in the assets structure of the enterprise OJSC «Nizhnekamskshina»

Index Index value

Intangible assets book value, mln.rub. 27.469
Intangible assets amount including goodwill, mln.rub. 596.533
Non-current assets book value, mln.rub. 3 672.082
Non-current assets book value including goodwill, mln.rub. 42 68.615
The share of intangible assets book value in non-current assets structure, unit shares 0.0074
The share of intangible assets with goodwill in non-current assets structure, unit shares 0.145

In consequence of intangible assets value adjustment at the enterprise OJSC «Nizhnekamskshina» this index in
non-current assets structure amounted 14.5 %.

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