We add amortization to net income to arrive at a true profit picture.

Name: We add amortization to net income to arrive at a true profit picture.
Brand: Quizplus
Rating: 5.0 (51 reviews)

Question

Quizplus · Accepted Answer

Amortization is a non-cash expense that reduces the value of intangible assets over time. It is already accounted for in the calculation of net income, so adding it back in would result in an inflated profit picture. Therefore, we do not add amortization to net income to arrive at a "true" profit picture.

We Add Amortization to Net Income to Arrive at a True