Accrual for Loss Contracts Related to Service

12 Months Ended

Dec. 31, 2017

Accrual For Loss Contract Related to Service

Accruals for Loss Contracts Related to Service

13.  Accrual for Loss Contracts Related to Service

Management reviews projected estimated service costs related to GenCare extended maintenance contracts to determine if loss contracts exist. A variety of assumptions are included in the estimates of future service costs, including the life of parts, failure rates of parts, and future costs of parts and labor. The Company had an accrual for loss contracts related to service of zero and $0.8 million, as of December 31, 2017 and 2016, respectively. During the year ended December 31, 2016, the Company renegotiated one of these service contracts.  As a result, the projected costs over the remaining life of the amended contract were estimated to be reduced and the Company recognized a gain within cost of revenue where the original charge of $10.1 million was recorded in 2015.

The following table summarizes activity related to the accrual for loss contracts related to service during the years ended December 31, 2017 and 2016 (in thousands):

	Year ended
	December 31, 2017		December 31, 2016
Beginning balance	$	752	$	10,050
Provision		—		(1,071)
Reductions for losses realized		(752)		(8,227)
Ending balance	$	—	$	752