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SSC Audit Tax Finance P-II QUESTION #6174
Question 1
A developer is evaluating a 'Lumpy Asset' for a project. Why might the 'Percentage of Sales' method fail here?
  • Lumpy assets grow exactly with sales
  • Lumpy assets are only acquired in large, discrete units and don't scale linearly✔️
  • Lumpy assets have no depreciation
  • Lumpy assets are always current assets
Correct Answer Explanation
Lesson 05 notes that lumpy assets (like a whole new factory) are a drawback of the method because they aren't added in small increments as sales grow.