CP 2020 ANNUAL REPORT 54 Equipment rents expense includes the cost associated with using other companies’ freight cars, intermodal equipment, and locomotives, net of rental income received from other railways for the use of CP’s equipment. Equipment rents expense was $142 million in 2020, an increase of $5 million, or 4%, from $137 million in 2019. This increase was primarily due to lower receipts for CP freight cars used by other railways and the unfavourable impact of the change in FX of $2 million, partially offset by lower usage of pooled freight cars as a result of lower volumes. Equipment rents expense was $137 million in 2019, an increase of $7 million, or 5%, from $130 million in 2018. This increase was primarily due to greater usage of pooled freight cars and the unfavourable impact of the change in FX of $3 million. Depreciation and amortization expense represents the charge associated with the use of track and roadway, buildings, rolling stock, information systems, and other depreciable assets. Depreciation and amortization expense was $779 million for 2020, an increase of $73 million, or 10%, from $706 million in 2019. This increase was primarily due to: Depreciation and amortization expense was $706 million for 2019, an increase of $10 million, or 1%, from $696 million in 2018. This increase was primarily due to a higher asset base, as a result of the capital program spending in 2019, and the unfavourable impact of the change in FX of $4 million, partially offset by the impact of depreciation studies and other adjustments. Purchased services and other expense encompasses a wide range of third-party costs, including contractor and consulting fees, locomotive and freight car repairs performed by third parties, property and other taxes, intermodal pickup and delivery services, casualty expense, expenses for joint facilities, and gains on land sales. Purchased services and other expense was $1,050 million in 2020, a decrease of $143 million, or 12%, from $1,193 million in 2019. This decrease was primarily due to: This decrease was partially offset by lower gains on land sales of $11 million in 2020, reported in Land sales and the unfavourable impact of the change in FX of $6 million. Purchased services and other expense was $1,193 million in 2019, an increase of $121 million, or 11%, from $1,072 million in 2018. This increase was primarily due to: Depreciation and Amortization Equipment Rents Purchased Services and Other • a higher asset base, as a result of the capital program spending in 2020; • the impact of depreciation studies and other adjustments made in 2019; and • the unfavourable impact of the change in FX of $2 million. • a gain of $68 million as a result of the remeasurement to fair value of the previously held equity investment in DRTP, reported in Other. • lower expenses primarily due to reduced number and severity of casualty incidents, reported in Casualty; • reduced business travel and event cost due to COVID-19, reported in primarily Support and facilities and Track and operations; • a decrease in charges associated with contingencies of $10 million, reported in Other; and • reduced variable expenses from lower volumes, reported in Intermodal and Equipment. • an increase in number and severity of casualty incidents of $73 million (excluding FX), which were the result of difficult operating conditions due to weather in the first half of 2019, reported in Casualty; • lower gains on land sales of $20 million mainly as a result of the sale of the Bass Lake railway line in 2018; • the unfavourable impact of the change in FX of $11 million; • an increase in legal fees, reported in Support and facilities; 2020 vs. 2019 2019 vs. 2018 For the year ended December 31  (in millions of Canadian dollars) 2020 2019 2018 Total Change % Change Total Change % Change Support and facilities $ 271 $ 278  $ 264  $ (7) (3) $ 14  5  Track and operations 282 278  268  4  1  10  4  Intermodal 209 222  221  (13) (6) 1  —  Equipment 113 125  143  (12) (10) (18) (13) Casualty 116 149  73  (33) (22) 76  104  Property taxes 126 133  124  (7) (5) 9  7  Other (57) 29  20  (86) (297) 9  45  Land sales (10) (21) (41) 11  (52) 20  (49) Total Purchased services and other $ 1,050 $ 1,193  $ 1,072  $ (143) (12) $ 121  11 