What is difference between depreciation and amortisation

Question

Accepted Answer

Depreciation is the allocation of the cost of tangible assets over their useful life, while amortization is the allocation of the cost of intangible assets over their useful life.

Depreciation applies to tangible assets such as buildings, vehicles, and machinery.
Amortization applies to intangible assets such as patents, copyrights, and trademarks.
Depreciation is recorded on the income statement as an expense, reducing net income.
Amortization is also recorded as an expense, but it is typically shown separately from other operating expenses.
Both depreciation and amortization are non-cash expenses, meaning they do not involve actual cash outflows.
Depreciation and amortization help in spreading the cost of an asset over its useful life, reflecting its gradual loss of value.

What is difference between depreciation and amortisation

Popular interview questions of Senior Finance Associate

Top HR questions asked in Ameriprise Financial Senior Finance Associate