6. Property, Plant and Equipment and Assets Held for Sale

Property, plant and equipment consisted of the following:

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During the years ended December 31, 2022 and 2021, the Company recognized depreciation expense of $8,197 and $6,820, respectively. For the years ended December 31, 2022 and 2021, depreciation expense of $5,686 and $4,939, respectively, is included in cost of goods sold and depreciation expense of $2,511 and $1,881, respectively, is included in depreciation and amortization in the consolidated statements of operations and comprehensive loss.

During the year ended December 31, 2021, the Company recorded a gain on sale of assets of $163. This gain is included in gains (losses) on sale of assets in the consolidated statements of operations and comprehensive loss.

In connection with management’s ongoing multi-phase plans to produce high-quality flowers, during the three months ended March 31, 2022, the Company replaced existing lights with new market-standard LED lights. As a result, the Company recorded a loss on disposal in the amount of $697, which represented the carrying value of existing lights. This loss is included in impairment loss and loss on disposal of assets in the consolidated statements of operations and comprehensive loss.

During the year ended December 31, 2021, the Company reclassified property valued at $563 from Property not in service to Assets held for sale at amount of $500, reflecting a $63 impairment loss in connection with management’s commitment to the sale and management’s evaluation of the recoverable amount of the property. During the three months ended September 30, 2022, the Company recorded an additional impairment loss of $175 related to this property to write it down to fair market value.

In connection with evaluation of the Company’s portfolio of assets classified as Assets held for sale, management determined that an asset valued at $500, previously reclassified from Construction in progress to Assets held for sale during 2021, would be sold for substantially less than its recoverable amount. As a result, the Company wrote down the asset’s carrying value of $500 within Assets held for sale as of December 31, 2021.

The Company had reclassified property value at $1,170 and $500 from Property not in service and Construction in progress, respectively, to Assets held for sale during 2021. These assets had been reclassified when management committed to a plan to actively market these properties for sale. Subsequent to the reclassifications, the asset comprising $1,170 was sold in September 2021 for $1,230, with the Company recording a $60 gain on the sale.