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Property And Equipment, Identifiable Intangible Assets and Goodwill | 12 Months Ended
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Dec. 31, 2018
Property And Equipment, Identifiable Intangible Assets and Goodwill |
Property And Equipment, Identifiable Intangible Assets and Goodwill | (7) Property and Equipment, Identifiable Intangible Assets and Goodwill Property and Equipment Property and equipment consisted of the following (in thousands):
|  | December 31, |
|  | 2018 |  | 2017 |
Compression and treating equipment |  | $ | 3,239,831 |  | $ | 1,799,151 |
Furniture and fixtures |  |  | 1,129 |  |  | 780 |
Automobiles and vehicles |  |  | 32,490 |  |  | 41,796 |
Computer equipment |  |  | 54,806 |  |  | 25,049 |
Buildings |  |  | 9,314 |  |  | 13,891 |
Land |  |  | 77 |  |  | 77 |
Leasehold improvements |  |  | 5,377 |  |  | 2,051 |
Total Property and equipment, gross |  |  | 3,343,024 |  |  | 1,882,795 |
Less: accumulated depreciation and amortization |  |  | (821,536) |  |  | (689,874) |
Total Property and equipment, net |  | $ | 2,521,488 |  | $ | 1,192,921 |
Depreciation is calculated using the straight-line method over the estimated useful lives of the assets as follows:
Compression equipment, acquired new |  | 25 years |
Compression equipment, acquired used |  | 5 - 25 years |
Furniture and fixtures |  | 3 - 10 years |
Vehicles and computer equipment |  | 1 - 10 years |
Buildings |  | 5 years |
Leasehold improvements |  | 5 years |
Depreciation expense on property and equipment was $186.5 million, $146.0 million and $134.6 million for the years ended December 31, 2018, 2017 and 2016, respectively. The Partnership implemented a change in the estimated useful lives of the USA Compression Predecessor’s property and equipment to conform to the Partnership’s historical asset lives, which is accounted for as a change in accounting estimate beginning on the Transactions Date on a prospective basis. This change resulted in a $33.8 million increase to both operating income and net income for the year ended December 31, 2018, and a $0.42 increase to both basic and diluted earnings per common unit and Class B Unit for year ended December 31, 2018. As of December 31, 2018 and 2017, there was $7.9 million and $14.6 million, respectively, of property and equipment purchases in accounts payable and accrued liabilities. During the year ended December 31, 2018, there were net losses on the disposition of assets of $13.0 million, primarily attributable to disposals of various property and equipment by the USA Compression Predecessor. During the years ended December 31, 2017 and 2016, the USA Compression Predecessor recognized a $0.4 million net loss and $0.1 million net gain on disposition of assets, respectively. For the year ended December 31, 2018, we evaluated the future deployment of our idle fleet under then-current market conditions and determined to retire and re-utilize key components of 103 compressor units, or approximately 33,000 horsepower, that were previously used to provide services in our business. As a result, we recorded $8.7 million in impairment of compression equipment for the year ended December 31, 2018. The primary causes for this impairment were: (i) units were not considered marketable in the foreseeable future, (ii) units were subject to excessive maintenance costs or (iii) units were unlikely to be accepted by customers due to certain performance characteristics of the unit, such as the inability to meet then-current quoting criteria without excessive retrofitting costs. These compression units were written down to their respective estimated salvage values, if any. The USA Compression Predecessor did not record any impairment of long-lived assets during the years ended December 31, 2017 or 2016. Identifiable Intangible Assets Identifiable intangible assets, net consisted of the following (in thousands):
|  | Customer |  |  |  |  |  |  |
|  | Relationships |  | Trade Names |  | Total |
Gross Balance at December 31, 2016 |  | $ | 263,662 |  | $ | 65,500 |  | $ | 329,162 |
Accumulated amortization |  |  | (106,111) |  |  | (24,836) |  |  | (130,947) |
Net Balance at December 31, 2017 |  | $ | 157,551 |  | $ | 40,664 |  | $ | 198,215 |
Gross Balance at December 31, 2017 |  | $ | 263,662 |  | $ | 65,500 |  | $ | 329,162 |
Additions |  |  | 221,500 |  |  | — |  |  | 221,500 |
Accumulated amortization |  |  | (130,001) |  |  | (28,111) |  |  | (158,112) |
Net Balance at December 31, 2018 |  | $ | 355,161 |  | $ | 37,389 |  | $ | 392,550 |
Amortization expense for the year ended December 31, 2018 was $27.2 million and for each of the years ended December 31, 2017 and 2016 was $20.5 million. The expected amortization of the intangible assets for each of the five succeeding years is $29.4 million. Goodwill As of October 1, 2018, we performed a qualitative assessment and concluded that it is not more likely than not that the fair value of our single reporting unit was less than its carrying value and that our goodwill was not impaired. For the year ended December 31, 2017 and in accordance with its early adoption of Accounting Standards Update (“ASU”) 2017-04, the USA Compression Predecessor performed a quantitative assessment for its annual goodwill impairment test and determined its fair value using a weighted combination of the discounted cash flow method and the guideline company method. Determining the fair value of a reporting unit requires judgment and the use of significant estimates and assumptions. Such estimates and assumptions include revenue growth rates, operating margins, weighted average costs of capital and future market conditions, among others. The USA Compression Predecessor believed the estimates and assumptions used in the impairment assessment were reasonable and based on available market information, but variations in any of the assumptions could have result in materially different calculations of fair value and determinations of whether or not an impairment is indicated. Under the discounted cash flow method, the USA Compression Predecessor determined fair value based on estimated future cash flows including estimates for capital expenditures, discounted to present value using the risk-adjusted industry rate, which reflects the overall level of inherent risk of the company. Cash flow projections were derived from one year budgeted amounts and five year operating forecasts plus an estimate of later period cash flows, all of which were developed by management. Subsequent period cash flows were developed using growth rates that management believed were reasonably likely to occur. Under the guideline company method, the USA Compression Predecessor determined its estimated fair value by applying valuation multiples of comparable publicly-traded companies to the projected EBITDA of the company and then averaging that estimate with similar historical calculations using a three-year average. In addition, the USA Compression Predecessor estimated a reasonable control premium representing the incremental value that accrues to the predecessor’s majority owner from the opportunity to dictate the strategic and operational actions of the business. Additionally, the USA Compression Predecessor considered the presence and probability of subsequent events on market transactions in estimating the fair value of the company, such as the Transactions discussed in Note 1. Based on the completion of the annual goodwill impairment testing as described above, the USA Compression Predecessor recorded a $223.0 million impairment equal to the excess of the carrying value over fair value for the year ended December 31, 2017. There was no goodwill impairment for the year ended December 31, 2016. As of December 31, 2018, the Partnership had $619.4 million of goodwill, of which $366.0 million was determined as part of the purchase price allocation to the Partnership’s assets acquired by the USA Compression Predecessor.

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- Definition The entire disclosure for long-lived, physical assets used in the normal conduct of business and not intended for resale. Includes, but is not limited to, accounting policies and methodology, roll forwards, depreciation, depletion and amortization expense, including composite depreciation, accumulated depreciation, depletion and amortization expense, useful lives and method used, income statement disclosures, assets held for sale and public utility disclosures. Also the disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss. + References No definition available. + Details
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