How does amortization typically impact a company's income statement?

Amortization typically decreases reported net income on a company's income statement. This occurs because amortization is a non-cash expense that reflects the systematic allocation of the cost of intangible assets over their useful lives. When a company recognizes amortization expense, it reduces its operating income, which, in turn, reduces net income for that period.

This deduction of the amortization expense is necessary for accurate financial reporting as it aligns the cost of using an intangible asset with the revenue it generates. By spreading the expense over several periods instead of expensing it all at once, the company provides a more accurate picture of its profitability.

Therefore, the impact of amortization is principally seen as a reduction in net income, making it a crucial factor in financial analysis and reporting regarding the performance of a business over time.