5. Investments in equipment and leases:

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


		Balance December 31, 2013		Reclassifications & Additions / Dispositions		Depreciation/ Amortization Expense or Amortization of Leases		Balance December 31, 2014
Net investment in operating leases	$	3,162	$	(108)	$	(154)	$	2,900
Assets held for sale or lease, net		2,481		(3)		-		2,478
Total	$	5,643	$	(111)	$	(154)	$	5,378

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

Recorded values of the Partnership’s leased asset portfolio are reviewed each quarter to confirm the reasonableness of established residual values and to determine whether there is indication that an asset impairment might have taken place. The Partnership uses a variety of sources and considers many factors in evaluating whether the respective book values of its assets are appropriate. In addition, the Partnership may direct a residual value review at any time if it becomes aware of issues regarding the ability of a lessee to continue to make payments on its lease contract. An impairment loss is measured and recognized only if the estimated undiscounted future cash flows of the asset are less than their net book value. The estimated undiscounted future cash flows are the sum of the residual value of the asset at the end of the asset’s lease contract and undiscounted future rents from the existing lease contract. The residual value assumes, among other things, that the asset is utilized normally in an open, unrestricted and stable market. Short-term fluctuations in the marketplace are disregarded and it is assumed that there is no necessity either to dispose of a significant number of the assets, if held in quantity, simultaneously or to dispose of the asset quickly. Impairment is measured as the difference between the fair value (as determined by a valuation method using discounted estimated future cash flows, third party appraisals or comparable sales of similar assets as applicable based on asset type) of the asset and its carrying value on the measurement date. Upward adjustments for impairments recognized in prior periods are not made in any circumstances.

As a result of these reviews, management determined that no impairment losses existed during 2014 and 2013.

The Partnership utilizes a straight line depreciation method for equipment in all of the categories currently in its portfolio of operating lease transactions. Depreciation expense on the Partnership’s equipment totaled $154 thousand and $321 thousand for the years ended December 31, 2014 and 2013, respectively.

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

Operating leases:

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


		Balance December 31, 2013		Additions		Reclassifications or Dispositions		Balance December 31, 2014
Transportation	$	22,757	$	-	$	(1,939)	$	20,818
Materials handling		83		-		-		83
		22,840		-		(1,939)		20,901
Less accumulated depreciation		(19,678)		(154)		1,831		(18,001)
Total	$	3,162	$	(154)	$	(108)	$	2,900

The average estimated residual value for assets on operating leases was 13% of the assets’ original cost at both December 31, 2014 and 2013.

The Partnership earns revenues from its marine vessels and/or 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. Contingent rentals totaled $37 thousand and $61 thousand for the years ended December 31, 2014 and 2013, respectively.

There were no operating leases in non-accrual status at December 31, 2014 and 2013.

Direct financing leases:

As of December 31, 2014 and 2013, the Partnership had no investment in direct financing leases, as its remaining finance lease matured on July 1, 2013.

At December 31, 2014, the aggregate amounts of future minimum lease payments are as follows (in thousands):


		Operating Leases
Year ending December 31, 2015	$	997
2016		637
2017		398
2018		157
2019		46
	$	2,235

The useful lives for each category of lease assets in the Partnership’s portfolio is reviewed at a minimum of once per quarter. As of December 31, 2014 and 2013, the respective useful lives of each category of lease assets in the Partnership’s portfolio are as follows (in years):


Equipment category		Useful Life
Transportation		35-40
Materials handling		7-10