Selecting Plans for Capital Asset Acquisition through Classification Problem Solving

The future existence and profitability of nearly all business entities from small privately-held firms to the largest international corporations depend on the judicious acquisition, maintenance, and disposal of capital assets. No concrete definition exists for the term "capital asset," but generally a capital asset has a useful life greater than one year and is expected to earn income sufficient to cover the operating expenses and amortized acquisition cost associated with it. Among the assets fitting this definition are those usually called "plant and equipment": land, buildings, facilities, equipment, machinery, and vehicles. The importance of capital asset decisions proceeds from the relatively large commitment of resources ordinarily involved and from the fact that funds used in acquisition traditionally remain invested for a long time.