Accounting Policies and Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2012

Accounting Policies and Recent Accounting Pronouncements [Abstract]

Accounting Policies and Recent Accounting Pronouncements

(2)   Accounting Policies and Recent Accounting Pronouncements

(a) Accounting Policies

The Company depreciates its rental equipment over its estimated useful life to its estimated fixed residual value using the straight line method of depreciation. During the three months ended March 31, 2012, the Company completed a review of historical disposal experience relating to its fleet of container equipment and concluded that the estimated residual values and depreciable lives used in its depreciation calculations should be amended effective January 1, 2012. The following table shows the current and prior residual values and depreciable lives that the Company adopted for each type of equipment:

	Residual Value				Depreciable Life in Years
	Current		Prior		Current		Prior
20-ft. standard dry van container	$	1,050	$	950		13.0		12.5
40-ft. standard dry van container	$	1,300	$	1,150		13.0		12.5
40-ft. high cube dry van container	$	1,650	$	1,300		13.0		12.5
20-ft. refrigerated container	$	2,750	$	2,250		12.0		12.0
40-ft. high cube refrigerated container	$	3,500	$	3,000		12.0		12.0

The residual values, which range from $1,000 to $3,500, and depreciable lives, of between 12.5 years and 15 years, for other specialized containers remain unchanged.

The above changes reduced the Company's depreciation expense and increased pre-tax income by approximately $2.1 million and $5.8 million, increased net income by approximately $1.9 million and $5.0 million, and increased diluted earnings per share by $0.10 and $0.25 for the three and nine months ended September 30, 2012, respectively.

Railcar equipment is depreciated over its estimated useful life of between 40 and 43 years, to its estimated residual value using the straight-line method.

There were no other changes to the Company's accounting policies during the nine months ended September 30, 2012. See Note 2 to the consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2011 filed with the SEC on March 8, 2012.

(b) Recent Accounting Pronouncements

In June 2011, the Financial Accounting Standards Board (FASB) issued guidance to increase the prominence of other comprehensive income in financial statements. Under this guidance, an entity has the option to present the components of net income and comprehensive income in either one or two consecutive financial statements. The option to present other comprehensive income in the statement of changes in equity has been eliminated. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The implementation of the accounting guidance did not have a material effect on the Company's consolidated financial statements.