Property and Equipment

6 Months Ended

Jun. 30, 2020

Note 4. Property and Equipment

Property and equipment by major asset class consist of the following as of June 30, 2020 and December 31, 2019 (in thousands):



	June 30,		December 31,
	2020		2019
Land	$	1,583	$	2,090
Building and improvements		7,682		12,242
Machinery and equipment		16,750		21,469
Computers and software		2,454		2,694
Furniture and fixtures		1,281		1,208
Vehicles		491		646
Right of use assets - finance leases		9,204		5,739
Service equipment		244		244
		39,689		46,332
Less: Accumulated depreciation and amortization		(15,581)		(14,333)
		24,108		31,999
Construction in progress		390		975
Property and equipment, net	$	24,498	$	32,974

In May 2020, we commenced a finance lease for land and a building in Odessa, Texas and recorded a long-term asset totaling $4.0 million and a corresponding lease liability. The lease has a ten-year term with two renewal periods available for an additional five years each.

The following table presents the depreciation expense associated with the following income statement line items for the three and six months ended June 30, 2020 and 2019 (in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Cost of sales
Cost of product sales	$	374	$	691	$	1,083	$	1,333
Cost of services		270		325		560		631
Selling, general and administrative expenses		350		479		803		957
Total depreciation	$	994	$	1,495	$	2,446	$	2,921

We evaluate our property and equipment for impairment whenever changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. We performed an impairment analysis to assess the recoverability of the carrying values for our property and equipment during the first quarter of 2020 because we determined that a triggering event had occurred. Evidence that led to a triggering event included the industry conditions, such as a reduction in global economic growth expectations, a significantly reduced demand for crude oil and refined products, the significant decline in commodity prices and the corresponding impact on future expectations of demand for our products and services primarily related to the Coronavirus disease 2019 (“COVID-19”) pandemic as well as the resulting decline in the quoted price of our common stock. As a result of the analysis, we recorded an impairment charge of $9.7 million in our property and equipment, primarily related to our land, building and improvements and machinery and equipment, because the carrying value exceeded the estimated fair value as of March 31, 2020. There were no impairment charges recorded on our property and equipment for the three months ended June 30, 2020 and 2019 as we determined that no triggering event had occurred.