REVENUE EARNING EQUIPMENT



	Estimated Useful Lives	December 31, 2016					December 31, 2015
	Estimated Useful Lives	Cost		Accumulated Depreciation		Net ⁽¹⁾	Cost	Accumulated Depreciation		Net ⁽¹⁾
	(In years)	(In thousands)
Held for use:
Full service lease	3 — 12	$	9,486,977	(3,031,937	)	6,455,040	8,839,941	(2,723,605	)	6,116,336
Commercial rental	4.5 — 12	2,499,010		(935,346	)	1,563,664	2,811,715	(907,412	)	1,904,303
Held for sale		494,355		(365,337	)	129,018	496,634	(332,538	)	164,096
Total		$	12,480,342	(4,332,620	)	8,147,722	12,148,290	(3,963,555	)	8,184,735

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(1)	Revenue earning equipment, net includes vehicles under capital leases of $43 million, less accumulated depreciation of $22 million, at December 31, 2016 and $47 million, less accumulated depreciation of $22 million, at December 31, 2015.

Depreciation expense was $1.10 billion, $1.04 billion and $968 million in 2016, 2015 and 2014, respectively.

In 2016, based on current and expected market conditions, we accelerated depreciation on certain classes of vehicles expected to be made available for sale through June 2018. The impact of the change increased depreciation by $10 million in 2016. Revenue earning equipment held for sale is stated at the lower of carrying amount or fair value less costs to sell. Losses on vehicles held for sale for which carrying values exceeded fair value are recognized at the time they arrive at our used truck centers and are presented within "Used vehicle sales, net" in the Consolidated Statements of Earnings. For revenue earning equipment held for sale, we stratify our fleet by vehicle type (trucks, tractors and trailers), weight class, age and other relevant characteristics and create classes of similar assets for analysis purposes. For a certain population of revenue earning equipment held for sale, fair value was determined based upon recent market prices obtained from our own sales experience for sales of each class of similar assets and vehicle condition. Expected declines in market prices were also considered when valuing the vehicles held for sale.These vehicles held for sale were classified within Level 3 of the fair value hierarchy. During 2016, 2015, and 2014, we recognized losses to reflect changes in fair value of $67 million, $18 million and $11 million, respectively.

The following table presents our assets that are measured at fair value on a nonrecurring basis and considered a Level 3 fair value measurement:



				Total Losses ⁽²⁾
	December 31,			Year ended December 31,
	2016		2015	2016		2015
Assets held for sale:
Revenue earning equipment: ⁽¹⁾
Trucks	$	28,638	11,469	$	14,645	7,660
Tractors	82,576		19,479	47,597		7,620
Trailers	2,839		2,475	5,173		2,676
Total assets at fair value	$	114,053	33,423	$	67,415	17,956

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(1)	Assets held for sale in the above table only include the portion of revenue earning equipment held for sale where net book values exceeded fair values and fair value adjustments were recorded. The net book value of assets held for sale not exceeding fair value was $15 million and $131 million as of December 31, 2016 and 2015, respectively.


(2)	Total losses represent fair value adjustments for all vehicles held for sale throughout the period for which fair value less costs to sell was less than carrying value.

For the twelve months ended December 31, 2016, the components of used vehicle sales, net were as follows:



	Twelve months ended December 31,
	2016			2015		2014
	(In thousands)
Gains on vehicle sales, net	$	(68,387	)	(117,809	)	(126,824	)
Losses from fair value adjustments	67,415			17,956		10,764
Used vehicle sales, net	$	(972	)	(99,853	)	(116,060	)