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Installment Receivable
3 Months Ended
Mar. 31, 2018
Installment Receivable  
Installment Receivable

(4)  Installment Receivable

 

On June 30, 2014, we entered into a FMV Bargain Purchase Option Grant Agreement (the “BPO Capital Lease Transaction”) with a customer, pursuant to which we granted a bargain purchase option to the customer with respect to certain compressor packages leased to the customer.  The bargain purchase option provides the customer with an option to acquire the equipment at a value significantly less than the fair market value at the end of the lease term, which is 7 years.

 

On November 1, 2016, we entered into a Formula Price Purchase Agreement (the “FPP Capital Lease Transaction”) with a customer with respect to certain assets leased to the customer that the customer will purchase at the end of the lease term. During the three months ended March 31, 2018, the customer exercised its option to purchase these assets which reduced the current installment receivable by $4.7 million.

 

Both capital leases were accounted for as sales type leases resulting in a current installment receivable included in other accounts receivable of $3.6 million and $8.5 million as of March 31, 2018 and December 31, 2017, respectively, and a long-term installment receivable of $9.7 million and $10.6 million as of such period ends, respectively.

 

Revenue and interest income related to both capital leases is recognized over the respective lease terms.  We recognize maintenance revenue within Contract operations revenue and interest income within Interest expense, net on the Unaudited Condensed Consolidated Statements of Operations.  For each of the three months ended March 31, 2018 and 2017, maintenance revenue related to the BPO Capital Lease Transaction was $0.3 million.  There is no maintenance revenue component to the FPP Capital Lease Transaction. Interest income related to both capital leases was $0.4 million for each of the three months ended March 31, 2018 and 2017.