Depreciation - Amortization

Some business assets decrease in value over time due to wear and tear or obsolescence. In order to recognize the portion of an asset's value that has been used up, businesses depreciate these assets.
Assets can be classified as tangible or intangible. Tangible assets are those which can be touched (eg. a building, office furniture, delivery vehicles.) An intangible asset can’t be touched—but still have value (eg. goodwill, brand recognition, patents, trademarks, and copyrights.)

The expense to write down a tangible asset is Depreciation.
The expense to write down an intangible asset is Amortization.

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Depreciation - Amortization

There are several ways to depreciate assets for your books or financial statements, but the IRS only allows one method of taking depreciation on your tax return depending on the asset.

For more about IRS depreciation rules, Click Here

Some small businesses use one method for their books and another for taxes, while others choose to keep things simple by using the tax method of depreciation for their books.

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Straight Line Depreciation
Double Declining Balance Depreciation
Sum of the Digits Depreciation
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