5. Supplemental Balance Sheet Information

Property and Equipment

Property and equipment consists of the following (in thousands)

	Estimated Useful	December 31,			December 31,
	Life (Years)	2017			2016
Office and computer equipment	3	$	409		$	409
Software	3		743			708
Laboratory equipment	5		4,224			4,516
Furniture	5-7		200			200
Manufacturing equipment	5		910			897
Manufacturing tooling and molds	0.5		255			154
T2-owned instruments and components	5		7,370			9,119
Leasehold improvements	Lesser of useful life or lease term		3,437			3,353
Construction in progress	n/a		1,591			1,299
			19,139			20,655
Less accumulated depreciation and amortization			(9,124	)		(7,066	)
Property and equipment, net		$	10,015		$	13,589

Construction in progress is primarily comprised of equipment and leasehold improvement construction projects that have not been placed in service. T2-owned instruments and components is comprised of raw materials and work-in-process inventory 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-owned instruments are placed in service once installation procedures are completed and are depreciated over five years. Depreciation expense for T2-owned instruments placed at customer sites pursuant to reagent rental agreements is recorded as a component of cost of product revenue and totaled $1.0 million and $0.6 million for the years ended December 31, 2017 and December 31, 2016, respectively. Depreciation expense for T2-owned instruments used for internal research and development is recorded as a component of research and development expense.

Depreciation and amortization expense of $2.9 million, $2.3 million and $1.5 million was charged to operations for the years ended December 31, 2017, 2016 and 2015, respectively.

During the fourth quarter of 2017, the Company received communication from the FDA that suggested the approval timeline would be longer than the company initially anticipated. The Company assessed the recoverability of T2-owned instruments based on delayed T2Bacteria cash flows and recorded an impairment charge of $2.6 million, related to T2-owned instruments and components, which is recorded in the cost of product revenue in the Consolidated Statements of Operations and Comprehensive Loss. The fair value used in the impairment calculation was based on the best estimated selling price of the underlying T2-owned instruments, less the estimated cost to sell the instruments.

Accrued Expenses

Accrued expenses consist of the following (in thousands):

	December 31,		December 31,
	2017		2016
Accrued payroll and compensation	$	2,793	$	2,479
Accrued research and development expenses		818		846
Accrued professional services		1,018		884
Other accrued expenses		1,589		699
Total accrued expenses	$	6,218	$	4,908

The Company classified $0.6 million, related to a fee associated with the Company’s Term Loan Agreement (Note 6), from other liabilities to accrued expenses and other current liabilities, as of December 31, 2017, to match the classification of the associated debt.