Depreciation is the scheduled charging to expense of a tangible asset over its useful life. Amortization is the scheduled charging to expense of an intangible asset over its useful life. Thus, the key difference between amortization and depreciation is that one relates to intangible assets, and the other to tangible assets.
Jan 31 2015 01:04 PM
Another difference between the two concepts is that amortization is almost always conducted on a straight-line basis, so that the same amount of amortization is charged to expense in every reporting period. Conversely, it is more common for depreciation expense to be recognized on an accelerated basis, so that more depreciation is recognized during earlier reporting periods than later reporting periods.
Yet another difference between amortization and depreciation is that the calculation of amortization does not usually incorporate any salvage value, since an intangible asset is not typically considered to have any resale value once its useful life has expired. Conversely, a tangible asset may have some salvage value, so this amount is more likely to be included in a depreciation calculation.