Goodwill / Bill Of Exchange in Financial Report?

Question

Where do we put the Commercial Bill Of Exchange in Financial report? Income statement or the Balance Sheet? Plus where?

Also

If it says, Goodwill is amortised at a rate of 10% per annum. What should be done with the 10% that has been amortised?

Answer 1

If you are the "Drawer" (i.e. the recipient of the Bill of Exchange), then it is an asset, as you are receiving the money. If you are the drawer (i.e. the writer of the Bill of Exchange), then it is a liability because you owe the money to someone else. The most common form of "Bill of Exchange" is a check. You are essentially asking your bank to pay a third party via an unconditional IOU. Remember, the balance sheet balances - so the offsetting entry is revenues if you are the drawer (the one to whom somebody wrote a check) or expense if you are the drawee (the one who wrote the check).

Goodwill is recorded at a gross amount and then netted downward by an accumulated "counter account", which accounts for all the amortization. Let's say you have a goodwill balance $50 in year 0, then then the amortization of 10% per year over the next 10 years down to nothing. At the end of year 1, the gross balance will be $50 minus an amortization of $5 for a NET balance of $45. The net is what is reported at the financial statements. Debit amortization expense $5, credit amortized goodwill $5 per year.