4. Investment in equipment and leases, net:

The Partnership’s investments in equipment and leases consist of the following (in thousands):


		Balance December 31, 2012		Reclassifications & Additions / Dispositions		Depreciation/ Amortization Expense or Amortization of Leases		Balance June 30, 2013
Net investment in operating leases	$	5,284	$	(1,352)	$	(219)	$	3,713
Net investment in direct financing leases		197		(15)		(132)		50
Assets held for sale or lease, net		1,284		1,335		-		2,619
Total	$	6,765	$	(32)	$	(351)	$	6,382

4. Investment in equipment and leases, net (continued):

Impairment of investments in leases and assets held for sale or lease:

Management periodically reviews the carrying values of its assets on leases and assets held for lease or sale. Impairment losses are recorded as an adjustment to the net investment in operating leases. No impairment losses were recorded during the three and six months ended June 30, 2013 and 2012.

The Partnership utilizes a straight line depreciation method over the term of the equipment lease for equipment on operating leases currently in its portfolio. Depreciation expense on the Partnership’s equipment was approximately $105 thousand and $120 thousand for the respective three months ended June 30, 2013 and 2012, and $219 thousand and $243 thousand for the respective six months ended June 30, 2013 and 2012.

All of the remaining property subject to leases was acquired in the years 1997 to 1998.

Operating leases:

Property on operating leases consists of the following (in thousands):


		Balance December 31, 2012		Additions		Reclassifications or Dispositions		Balance June 30, 2013
Transportation	$	28,689	$	-	$	(181)	$	28,508
Marine vessels		7,400		-		(7,400)		-
Materials handling		83		-		-		83
		36,172		-		(7,581)		28,591
Less accumulated depreciation		(30,888)		(219)		6,229		(24,878)
Total	$	5,284	$	(219)	$	(1,352)	$	3,713

The average estimated residual value for assets on operating leases was 13% and 14% of the assets’ original cost at June 30, 2013 and December 31, 2012, respectively. There were no operating leases in non-accrual status at June 30, 2013 and December 31, 2012.

The Partnership earns revenues from its marine vessels and certain lease assets based on utilization of such assets or through fixed term leases. Contingent rentals (i.e., short-term, operating charter hire payments) and the associated expenses are recorded when earned and/or incurred. The revenues associated with these rentals are included as a component of operating lease revenues and totaled $15 thousand and $58 thousand for the respective three months ended June 30, 2013 and 2012, and $30 thousand and $58 thousand for the respective six months ended June 30, 2013 and 2012.

Direct financing leases:

As of June 30, 2013, investment in direct financing leases consists primarily of manufacturing equipment. As of December 31, 2012, such investment consisted primarily of various transportation, ground support and manufacturing equipment. The components of the Partnership’s investment in direct financing leases as of June 30, 2013 and December 31, 2012 are as follows (in thousands):


		June 30, 2013		December 31, 2012
Total minimum lease payments receivable	$	-	$	165
Estimated residual values of leased equipment (unguaranteed)		50		65
Investment in direct financing leases		50		230
Less unearned income		-		(33)
Net investment in direct financing leases	$	50	$	197

The Partnership’s remaining direct financing lease matures on July 1, 2013. At June 30, 2013, the Partnership retained a $50 thousand residual position in the equipment underlying such direct financing lease.

At June 30, 2013, the aggregate amounts of future minimum lease payments are as follows (in thousands):


		Operating Leases
Six months ending December 31, 2013	$	966
Year ending December 31, 2014		724
2015		631
2016		337
2017		311
2018		78
	$	3,047