Difference between amortization and depreciation

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Amortization is the process of spreading the cost of an intangible asset over its useful life, while depreciation is the process of spreading the cost of a tangible asset over its useful life.

Amortization is used for intangible assets such as patents, copyrights, and trademarks.
Depreciation is used for tangible assets such as buildings, machinery, and vehicles.
Amortization expense is usually a straight-line method, while depreciation expense can be calculated using various methods such as straight-line, declining balance, or units of production.
Both amortization and depreciation are non-cash expenses that reduce the value of an asset over time.
The purpose of both is to match the cost of an asset with the revenue it generates over its useful life.

Difference between amortization and depreciation

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