Medical equipment consisted of the following as of December 31 (in thousands):

Included in medical equipment in rental service above are $3.4 million and $6.3 million, as of December 31, 2013 and 2012, respectively, of pumps obtained under various capital leases. Included in accumulated depreciation above are $0.6 million and $3.0 million, as of December 31, 2013 and 2012, respectively, associated with the same capital leases. Under the terms of all such capital leases, the Company does not presently hold title to these pumps and will not obtain title until such time as the capital lease obligations are settled in full.

Depreciation expense for the years ended December 31, 2013 and 2012 was $5.1 million and $5.2 million, respectively, which were recorded in cost of revenues — pump depreciation and loss on disposal.

As of December 31, 2013, medical equipment held for sale or rental contains approximately $1.0 million of pre-owned equipment received from a financial institution with such equipment coming off lease. Under the Company’s arrangement with the financial institution, the Company does not pay for the equipment until it is sold. The liability for this equipment is shown in other current liabilities for a similar amount. The Company assumes risk of loss and accounts for the disposition of such equipment as a sale.