Depreciation refers to the allocation of the cost of tangible fixed assets (such as buildings, machinery, vehicles, or equipment) over their useful life. These are physical assets that lose value over time due to wear and tear, aging, or obsolescence.
Amortization refers to the allocation of the cost of intangible fixed assets (such as patents, trademarks, copyrights, or goodwill) over their useful life. Unlike tangible assets, intangible assets don't have a physical presence, but their value may decline over time, and amortization is used to systematically expense this decline.