What depreciation method is used for Project 1?

The straight-line method of depreciation is the most commonly used approach, and it's favored for its simplicity and ease of understanding. This method allocates an equal amount of depreciation expense to each accounting period over the useful life of the asset. This uniform distribution makes it straightforward to predict future expenses and easily compare financial statements year over year.

When applied to Project 1, the straight-line method means that the asset's cost is spread evenly across its lifespan, which helps businesses maintain consistent profit margins. This predictability is particularly useful for budgeting and forecasting, as it allows for a stable representation of asset value on the financial statements.

In addition, using the straight-line method is often aligned with the underlying assumption that the asset will contribute equally to revenue generation over its useful life. This makes it coherent since it matches the asset's depreciation expense directly with the revenue it generates.