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Decrease in the value of an asset by the time is called depreciation. Example Car
Amortization is same, decrease in the amount over a period of time. Example Debt
The main difference between two is that depreciation is charged on tangible assets like plant and machinery, buildings etc while as amortization is charged on intangible assets such as patents, goodwill etc
Depreciation, Depletion and Amortization (DD&A) is a method of accounting associated with the acquisition, exploration and development of new oil and natural gas reserves. Depreciation is a means of allocating the cost of a material asset over its useful life, such as operating equipment. Depletion is used to allocate the cost of extracting natural resources from the earth, and is the actual physical depletion of a natural resource by a company. Amortization is the deduction of capital expenses over a specified time period (typically the life of an asset), which in the case of oil and gas, refers to tangible non-drilling costs sustained while developing the reserves.
Two accounting approaches are used by companies involved in the exploration and development of oil and gas: the successful efforts (SE) method, and the full cost (FC) method. Each method handles differently the treatment of specific operating expenses associated with the exploration of new oil and natural gas reserves. DD&A, production expenses and exploration costs are recorded on a company's income statement. DD&A expenses charged to the income statement are determined by the "units-of-production" method.
Depreciation is to charge off the cost of a tangible asset over its useful life.
Amortization is to charge off the cost of an intangible asset over its life.
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