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REVENUE EARNING EQUIPMENT, NET | 3 Months Ended
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Mar. 31, 2021
Revenue Earning Equipment [Abstract] |
REVENUE EARNING EQUIPMENT, NET | REVENUE EARNING EQUIPMENT, NET
|  | Estimated Useful Lives |  | March 31, 2021 |  | December 31, 2020
|  |  | Cost |  | Accumulated Depreciation |  | Net |  | Cost |  | Accumulated Depreciation |  | Net
|  | (In years) |  | (In thousands)
Held for use: |  |  |  |
Trucks |  | 3 — 7 |  | $ | 5,030,474 |  |  | $ | (1,850,029) |  |  | $ | 3,180,445 |  |  | $ | 5,061,266 |  |  | $ | (1,818,594) |  |  | $ | 3,242,672 |
Tractors |  | 4 — 7.5 |  | 7,020,010 |  |  | (2,919,190) |  |  | 4,100,820 |  |  | 7,013,595 |  |  | (2,853,591) |  |  | 4,160,004 |
Trailers and other |  | 9.5 — 12 |  | 2,006,980 |  |  | (829,791) |  |  | 1,177,189 |  |  | 2,046,768 |  |  | (804,006) |  |  | 1,242,762 |
Held for sale |  |  |  | 514,389 |  |  | (405,456) |  |  | 108,933 |  |  | 644,132 |  |  | (512,555) |  |  | 131,577 |
Total |  |  |  | $ | 14,571,853 |  |  | $ | (6,004,466) |  |  | $ | 8,567,387 |  |  | $ | 14,765,761 |  |  | $ | (5,988,746) |  |  | $ | 8,777,015 |
Policy and Accelerated Depreciation We periodically review and adjust, as appropriate, the estimated residual values and useful lives of existing revenue earning equipment for the purposes of recording depreciation expense. A reduction in estimated residual values or useful lives will result in an increase in depreciation expense over the remaining life of the vehicle. Our review of the estimated residual values and useful lives of revenue earning equipment is established with a long-term view, which we refer to as "policy depreciation," and is based on vehicle class, generally subcategories of trucks, tractors and trailers, by weight, usage and other factors. These other factors include, but are not limited to, historical, current, and expected future market prices; expected lives of vehicles; and expected sales of used vehicles in the wholesale and retail markets. Factors that could cause actual results to materially differ from estimates include, but are not limited to, changes in technology; changes in supply and demand; competitor pricing; regulatory requirements; driver shortages, requirements and preferences; and changes in underlying assumption factors. We have disciplines related to the management and maintenance of our vehicles designed to manage the risk associated with the residual values of our revenue earning equipment. We also assess estimates of residual values of vehicles expected to be made available for sale in the near-term (generally 12 to 24 months) based on near-term market rates and conditions and may adjust estimates of residual values for these vehicles, which we refer to as "accelerated depreciation." The following table provides a summary of amounts that have been recorded for accelerated and policy depreciation related to our prior residual value estimate changes in 2019 and 2020, as well as used vehicle sales results (rounded to the closest million):
|  | Three months ended March 31,
|  | 2021 |  | 2020 |  |
|  | (In thousands)
Accelerated depreciation |  | $ | 30,000 |  |  | $ | 79,000 |  |  |
Policy depreciation |  | 58,000 |  |  | 51,000 |  |  |
Used vehicle sales, net |  | (29,000) |  |  | 21,000 |  |  |
Used Vehicle Sales and Valuation Adjustments 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, which we refer to as "valuation adjustments," are recognized at the time they are deemed to meet the held for sale criteria and are presented within “Used vehicle sales, net” in the Condensed 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 revenue earning equipment held for sale, fair value was determined based upon recent market prices obtained from our own sales experience for each class of similar assets and vehicle condition. In addition, we also consider expected declines in market prices when valuing the vehicles held for sale, as well as the forecasted sales channel mix (retail/wholesale). The following table presents our assets held for sale that are measured at fair value on a nonrecurring basis and considered a Level 3 fair value measurement:
|  |  | Valuation Adjustments
|  |  |  |  | Three months ended March 31,
| March 31, 2021 |  | December 31, 2020 (2) |  | 2021 |  | 2020
| (In thousands)
Revenue earning equipment held for sale (1): |  |  |  |  |  |  |
Trucks | $ | 5,998 |  |  | $ | 3,848 |  |  | $ | 890 |  |  | $ | 11,062 |
Tractors | 2,508 |  |  | 2,211 |  |  | 84 |  |  | 8,453 |
Trailers and other | 2,254 |  |  | 4,092 |  |  | 2,047 |  |  | 1,993 |
Total assets at fair value | $ | 10,760 |  |  | $ | 10,151 |  |  | $ | 3,021 |  |  | $ | 21,508 |
———————————— (1)Revenue earning equipment held for sale in the table above only includes the portion where net book values exceeded fair values and valuation adjustments were recorded. The net book value of assets held for sale that were less than fair value was $98 million and $121 million as of March 31, 2021 and December 31, 2020, respectively. (2)Adjusted the presentation of the vehicles held for sale that were recorded to fair value to now exclude vehicles that previously recognized accumulated accelerated depreciation. The components of used vehicle sales, net were as follows:
| Three months ended March 31,
| 2021 |  | 2020
| (In thousands)
Losses (gains) on vehicle sales, net | $ | (31,872) |  |  | $ | (824) |
Losses from valuation adjustments | 3,021 |  |  | 21,508 |
Used vehicle sales, net | $ | (28,851) |  |  | $ | 20,684 |

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- Definition Revenue Earning Equipment. + References No definition available. + Details
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- Definition Disclosure of revenue earning equipment used in the normal conduct of the vehicle leasing and commercial rental business, not otherwise defined in the taxonomy. This disclosure may include accounting policies and methodology and impact of changes thereto, a schedule of revenue earning equipment cost, accumulated depreciation, net book value, useful lives, assets held for sale. In addition, this disclosure includes vehicles acquired under capital leases and accumulated amortization included within revenue earning equipment. This element may be used as a single block of text to include the entire revenue earning equipment disclosure, including data and tables. + References No definition available. + Details
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