Final answer:
Depreciation refers to the allocation of cost for tangible assets, depletion involves natural resources, and amortization deals with intangible assets, with each method used to spread the cost of assets over their beneficial periods.
Step-by-step explanation:
The terms depreciation, depletion, and amortization refer to different methods of allocating the cost of an asset over its useful life, but they apply to different types of assets. Depreciation is used for tangible assets, such as buildings and machinery, reflecting their usage and wear and tear over time. Depletion pertains to the allocation of the cost of natural resources as they are extracted and sold. Amortization, on the other hand, applies to intangible assets, like patents or goodwill, and it spreads their cost over the period they provide benefits.
Understanding the distinction between these methods is essential for accurate financial reporting and for businesses to make informed decisions about their capital investments and cost management strategies.