4. Investment in equipment and leases, net:

The Company’s investment in leases consists of the following (in thousands):


		Balance December 31, 2012		Reclassifications & Additions / Dispositions		Depreciation/ Amortization Expense or Amortization of Leases		Balance September 30, 2013
Net investment in operating leases	$	6,230	$	(1,104)	$	(492)	$	4,634
Net investment in direct financing leases		100		(52)		(48)		-
Assets held for sale or lease, net		629		702		(38)		1,293
Total	$	6,959	$	(454)	$	(578)	$	5,927

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. There were no impairment losses recorded during the three and nine months ended September 30, 2013 and 2012.

The Company 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 Company’s equipment totaled $154 thousand and $276 thousand for the respective three months ended September 30, 2013 and 2012, and $530 thousand and $847 thousand for the respective nine months ended September 30, 2013 and 2012.

All of the remaining property on lease was acquired during the years 1999 through 2001.

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

Operating leases:

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


		Balance December 31, 2012		Additions		Reclassifications or Dispositions		Balance September 30, 2013
Containers	$	19,380	$	-	$	(1,976)	$	17,404
Transportation, rail		13,125		-		(1,731)		11,394
Marine vessel		4,793		-		(4,793)		-
Other		640		-		-		640
		37,938		-		(8,500)		29,438
Less accumulated depreciation		(31,708)		(492)		7,396		(24,804)
Total	$	6,230	$	(492)	$	(1,104)	$	4,634

The average estimated residual value for assets on operating leases was 11% and 10% of the assets’ original cost at September 30, 2013 and December 31, 2012, respectively. As of September 30, 2013 and December 31, 2012, the Company had no operating leases in non-accrual status.

The Company may earn revenues from its containers, marine vessel and certain other 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 $392 thousand and $596 thousand for the respective three months ended September 30, 2013 and 2012, and $1.4 million and $1.8 million for the respective nine months ended September 30, 2013 and 2012.

Direct financing leases:

As of September 30, 2013, the Partnership had no investment in direct financing leases, as its remaining finance lease matured on July 1, 2013. At December 31, 2012, such investment primarily consisted of railcars and manufacturing equipment. The components of the Company’s investment in direct financing leases as of December 31, 2012 are as follows (in thousands):


		December 31, 2012
Total minimum lease payments receivable	$	48
Estimated residual values of leased equipment (unguaranteed)		52
Investment in direct financing leases		100
Less unearned income		-
Net investment in direct financing leases	$	100

At September 30, 2013, the aggregate amount of future lease payments associated with operating leases is as follows (in thousands):


		Operating Leases
Three months ending December 31, 2013	$	386
Year ending December 31, 2014		1,199
2015		568
2016		280
2017		263
2018		75
	$	2,771