The difference between amortization and depreciation isn't complicated, but it reveals something important about how accountants think.

Depreciation is for tangible assets — machines, buildings, trucks. Things you can touch that wear out over time.

Amortization is for intangible assets — patents, software, customer relationships. Things you can't touch but still lose value.

Same concept, different vocabulary. Both spread the cost of an asset over its useful life instead of hitting the income statement all at once.

Why does this matter? Because when you're reading financials, these two lines tell you what kind of business you're looking at. Heavy depreciation? Capital-intensive. Heavy amortization? Probably acquired a lot of intangibles or developed software.

Neither is inherently good or bad. But if you don't know the difference, you're reading the story wrong.