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The Value Added Intellectual Coefficient (VAIC) model has been widely used as an IC measurement tool as found in the literature. However, it is subject to critical review recently. This study attempts to examine the basic aspect of the VAIC model. This is achieved by a detail examination of the formula and assumption used in measuring the sub-elements of the model, i.e. value added, human capital, structural capital and tangible capital. The study found that the measurement of value added and human capital are justifiable. However, the measurement of structural capital and tangible capital are questionable. This study may contribute in the discussion of the validity of VAIC model as an IC measurement tool.

Keywords: Intellectual capital measurement, VAIC model

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