Difference between ammortization and depreciation

Question

Accepted Answer

Amortization is the gradual reduction of an intangible asset's value, while depreciation is the gradual reduction of a tangible asset's value.

Amortization applies to intangible assets like patents, copyrights, and trademarks.
Depreciation applies to tangible assets like buildings, vehicles, and machinery.
Amortization is typically calculated using the straight-line method.
Depreciation can be calculated using various methods such as straight-line, declining balance, or units of production.
Amortization expense is recorded on the income statement, while accumulated amortization is recorded on the balance sheet.
Depreciation expense is recorded on the income statement, while accumulated depreciation is recorded on the balance sheet.

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