Equipment under operating leases, net

9 Months Ended

Sep. 30, 2022

Equipment under operating leases, net [Abstract]

Equipment under operating leases, net

4. Equipment under operating leases, net:

The Company’s equipment under operating leases consists of the following (in thousands):

					Depreciation/
					Amortization
	Balance		Reclassifications		Expense or		Balance
	December 31,		Additions and		Amortization		September 30,
	2021		Dispositions		of Leases		2022
Equipment under operating leases, net	$	7,852	$	(135)	$	(1,063)	$	6,654
Assets held for sale or lease, net		559		(70)		(2)		487
Total	$	8,411	$	(205)	$	(1,065)	$	7,141

The Company utilizes a straight line depreciation method over the term of the equipment lease for equipment on operating leases currently in its portfolio. Depreciation expense on the Company’s equipment totaled $342 thousand and $351 thousand for the respective three months ended September 30. 2022 and 2021. For the nine months ended September 30, 2022 and 2021, depreciation expense totaled $1.1 million and $1.3 million, respectively. Depreciation expense for the three and nine months ended September 30, 2022, include $7 thousand and $36 thousand, respectively, of additional depreciation recorded to reflect year-to-date changes in estimated residual values of certain equipment generating revenue under month to-month extensions. Such additional depreciation totaled $6 thousand and $276 thousand during the three and nine months ended September 30, 2021, respectively.

There were no impairment losses recorded on equipment during the respective three and nine months ended September 30, 2022. By comparison, impairment losses totaling $58 thousand and $619 thousand were recorded for the three and nine months ended September 30, 2021, respectively.

All of the Company’s lease asset purchases and capital improvements were made during the years from 2009 through

2020.

Operating leases:

Property on operating leases consists of the following (in thousands):

	Balance						Balance
	December 31,				Reclassifications		September 30,
	2021		Additions		or Disposition		2022
Marine vessel	$	19,410	$	—	$	—	$	19,410
Transportation, rail		4,032		—		(552)		3,480
Transportation		208		—		—		208
Manufacturing		3,119		—		(2,022)		1,097
Materials handling		125		—		—		125
Construction		582		—		—		582
Agriculture		542		—		(263)		279
		28,018		—		(2,837)		25,181
Less accumulated depreciation		(20,166)		(1,063)		2,702		(18,527)
Total	$	7,852	$	(1,063)	$	(135)	$	6,654

The average estimated residual value for assets on operating leases was 20% of the assets’ original cost at both September 30, 2022 and December 31, 2021. There were no operating leases in non-accrual status at both September 30, 2022 and December 31, 2021.

At September 30, 2022, the aggregate amounts of future minimum lease payments receivable are as follows (in thousands):

	Operating
	Leases
Three months ending December 31, 2022	$	381
Year ending December 31, 2023		1,399
2024		422
2025		209
2026		52
	$	2,463

The useful lives for each category of leases is reviewed at a minimum of once per quarter. As of September 30, 2022 and December 31, 2021, the respective useful lives of each category of lease assets in the Company’s portfolio are as follows (in years):

Equipment category	Useful Life
Transportation, rail	35 - 50
Marine vessel	20 - 30
Manufacturing	10 -15
Agriculture	7 - 10
Construction	7 - 10
Materials handling	7 - 10
Transportation	7 - 10