Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life. It is NOT to reduce the value of the asset due to wear and tear. It is an allocation of Historical Cost ONLY. Similarly it is not bringing down an asset to its market value. Similarly, obsolescence is not a direct reason for depreciation (unless the obsolesence is predicatable – in which case obsolesence would reduce the useful life)
Amortization is an accounting term that refers to the process of allocating the cost of an intangible asset over a period. There is another meaning of amortisation – repayment of loan principal over time. This is usually used for banking
Depletion refers to the allocation of the cost of natural resources over time. For example, an oil well has a finite life before all the oil is pumped out. Therefore, the oil well’s setup costs are spread out over the predicted life of the oil well.
Impairment – it is mandatory to mention Ind AS 36. Impairment is done when there is a significant unexpected decline in the value of an asset, say due to fire. The recoverable amount should have fallen below the carrying amount at the Cash Generating Unit level. For further details refer Ind AS 36 questions
