Leases

12 Months Ended

Dec. 31, 2020

The Company determines if an arrangement is a lease at inception by assessing whether it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company’s leases are primarily related to property leases for its field offices. The Company's leases have remaining lease terms of one to nine years. Renewal and termination options are included in the lease term when it is reasonably certain that the Company will exercise the option.

The Company's lease agreements do not contain any contingent rental payments, material residual guarantees or material restrictive covenants.

Right of use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As substantially all of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate, which is based on a fully collateralized loan over the lease term, to determine the present value of lease payments. Based on the present value of lease payments for the Company's existing leases, the Company recorded net lease assets and lease liabilities of approximately $451,000, respectively, upon adoption. The Company had no finance leases. The new lease standard did not materially impact the Company's consolidated statements of income and had no impact on the Company's consolidated statements of cash flows. The impact of the new lease standard on the December 31, 2020 and 2019 consolidated balance sheet was as follows:


	Classification on Consolidated	December 31,
	Balance Sheet	2020			2019
		($ in thousands)
Operating lease assets	Right of use assets-operating leases	$	483		$	604

Current lease liabilities	Current operating leases	$	198		$	189
Noncurrent lease liabilities	Long-term operating leases	285			415
Total lease liabilities		$	483		$	604

Weighted average remaining lease term in years		1.5			2.6
Implicit Rate		3.2		%	3.1		%

Operating lease costs are recognized on a straight-line basis over the lease term. Total operating lease costs for the year ended December 31, 2020 was approximately $550,000.


	December 31,
	2020		2019
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities
Operating lease cost (1) (2)	$	550	$	548

(1) Lease costs are classified on the Consolidated Statements of Operations in cost of sales, cost of compressors and selling, general and administrative expenses.

(2) Includes costs of $333,000 for leases with terms of 12 months or less and $217,000 for leases with terms greater than 12 months for the year ended December 31, 2020. Includes costs of $350,000 for leases with terms of 12 months or less and $198,000 for leases with terms greater than 12 months for the year ended December 31, 2019.

The following table shows the future maturities of lease liabilities:


Years Ending December 31,	Lease Liabilities
	(in thousands)
2021	$	211
2022	76
2023	38
2024	38
2025	38
Thereafter	130
Total lease payments	531
Less: Imputed interest	(48)
Total	$	483

Rent expense under such leases was $217,000 and $198,000 for the years ended December 31, 2020 and 2019, respectively.