PROPERTY AND EQUIPMENT

3 Months Ended

Mar. 31, 2017

Property, Plant and Equipment [Abstract]

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



	March 31,			December 31,
	2017			2016
Land	$	377		$	377
Building	2,868			2,868
Machinery and equipment	37,403			36,588
Leasehold and building improvements	7,794			7,662
Construction in progress	1,485			1,655
	49,927			49,150
Less accumulated depreciation	(33,569		)	(32,569		)
Total property and equipment, net	$	16,358		$	16,581

The Company has utilized marketing programs whereby its instruments in inventory may be placed in a customer's location on a rental basis. The cost of these instruments is transferred to machinery and equipment and depreciated, typically over a five to seven year period depending on the circumstance under which the instrument is placed with the customer. Total costs transferred from inventory were approximately $0.1 million and $1.8 million for the three months ended March 31, 2017 and the annual period ended December 31, 2016, respectively.

The Company has sold certain customer rental contracts and underlying assets to third parties under agreements that once the customer has met its obligations under the contract, ownership of the assets underlying the contract would be returned to the Company. The Company enters a debit to cash and a corresponding credit to deferred revenue at the time of these sales. Since the Company anticipates it will regain ownership of the assets underlying these sales, it reports these assets as part of property and equipment and depreciates these assets in accordance with its depreciation policies. The Company had $0.3 million of net property and equipment related to these transactions as of both March 31, 2017 and December 31, 2016, all related to the Company's 54.6%-owned subsidiary, US Imaging.

Depreciation expense for property and equipment was $1.0 million and $1.1 million for the three months ended March 31, 2017 and 2016, respectively.