4. Supplemental Balance Sheet Information

Inventories

Inventories are stated at the lower of cost or market value on a first-in, first-out basis and are comprised of the following (in thousands):


	June 30,		December 31,
	2016		2015
Raw materials	$	703	$	203
Work-in-process		472		287
Finished goods		260		193
Total inventories	$	1,435	$	683

Property and Equipment

Property and equipment consists of the following (in thousands):


	June 30,		December 31,
	2016		2015
Office and computer equipment	$	403	$	395
Software		697		632
Laboratory equipment		4,426		4,112
Furniture		200		187
Manufacturing equipment		884		577
Manufacturing tooling and molds		74		71
T2 instruments and components		7,433		4,960
Leasehold improvements		3,357		3,332
Construction in progress		1,195		1,196
		18,669		15,462
Less accumulated depreciation and amortization		(5,854)		(4,807)
Property and equipment, net	$	12,815	$	10,655

Construction in progress is primarily comprised of equipment and leasehold improvement construction projects that have not been placed in service. T2 instruments and components is comprised of raw materials and work-in-process instruments that are expected to be used or used to produce Company-owned instruments, based on our business model and forecast, and completed instruments that will be used for internal research and development or reagent rental agreements with customers. Completed T2 instruments are placed in service once installation procedures are completed and are depreciated over five years. The Company has approximately $3.1 million and $1.9 million of Company-owned T2 instruments installed and depreciating as of June 30, 2016 and December 31, 2015, respectively. Depreciation expense for Company-owned T2 instruments placed at customer sites pursuant to reagent rental agreements is recorded as a component of cost of product revenue and totaled approximately $150,000 and $238,000 for the three and six months ended June 30, 2016, respectively. There was no depreciation expense during the three and six months ended June 30, 2015, as no T2 instruments were in service during that time period. Depreciation expense for T2 instruments used for internal research and development is recorded as a component of research and development expense.

Accrued Expenses

Accrued expenses consist of the following (in thousands):


	June 30,		December 31,
	2016		2015
Accrued payroll and compensation	$	2,282	$	2,418
Accrued research and development expenses		722		458
Accrued professional services		597		542
Other accrued expenses		905		744
Total accrued expenses	$	4,506	$	4,162