Company: MGRC
Filing Date: 2025-02-19
Form Type: 10-K
Source: 0000950170-25-023116
Chunk: 1

Company: MCGRATH RENTCORP
Filing Date: 2025-02-19
Form: 10-K
Item: Item 8
Chunk 1
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 intercompany accounts and transactions have been eliminated in consolidation.Revenue RecognitionLease revenues - Rental revenues from operating leases are recognized on a straight-line basis over the term of the lease for all operating segments.  Rental billings for periods extending beyond period end are recorded as deferred income and are recognized in the period earned.  Rental related services revenues are primarily associated with relocatable modular building and portable storage container leases.  For modular building leases, rental related services revenues for modifications, delivery, installation, dismantle and return delivery are lease related because the payments are considered minimum lease payments that are an integral part of the negotiated lease agreement with the customer.  These revenues are recognized on a straight-line basis over the term of the lease. Certain leases are accounted for as sales-type leases.  For these leases, sales revenue and the related accounts receivable are recognized upon delivery and installation of the equipment and the unearned interest is recognized over the lease term on a basis which results in a constant rate of return on the unrecovered lease investment.  Other revenues include interest income on sales-type leases and rental income on facility leases.  Non-lease revenues - Sales revenue is recognized upon delivery and installation of the equipment to customers.  Revenue from contracts that satisfy the criteria for over-time recognition are recognized as work is performed by using the input method based on the ratio of costs incurred to estimated total contract costs for each contract.  The majority of revenue for these contracts is derived from long-term projects which typically span multiple quarters.  The Company uses third parties to provide certain services as part of its contracts with customers. The Company is considered the principal (vs. an agent) as the Company is responsible for the fulfillment of all service elements and risks associated with the underlying performance obligation. Revenue for these services is recognized on a gross basis.Other revenue is recognized when earned and primarily includes interest income on sales-type leases, rental income on facility leases and certain logistics services.Sales taxes charged to customers are reported on a net basis and are excluded from revenues and expenses.

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Depreciation of Rental EquipmentRental equipment is depreciated on a straight-line basis for financial reporting purposes and on an accelerated basis for income tax purposes.  The costs of major refurbishment of relocatable modular buildings and portable storage containers are capitalized to the extent the refurbishment significantly adds value to, or extends the life of the equipment.  Maintenance and repairs are expensed as incurred.The estimated useful lives and residual values of the Company’s rental equipment used for financial reporting purposes are as follows: