4. Investments in equipment and leases, net:

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


		Balance December 31, 2014		Reclassifications & Additions / Dispositions		Depreciation/ Amortization Expense or Amortization of Leases		Balance December 31, 2015
Net investment in operating leases	$	3,697	$	(188)	$	(317)	$	3,192
Net investment in direct financing leases		18		-		(6)		12
Assets held for sale or lease, net		785		(65)		-		720
Total	$	4,500	$	(253)	$	(323)	$	3,924

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

Recorded values of the Company’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 Company uses a variety of sources and considers many factors in evaluating whether the respective book values of its assets are appropriate. In addition, the company 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 2015 and 2014.

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 $317 thousand and $455 thousand for the respective years ended December 31, 2015 and 2014.

All of the remaining property on lease, including capitalized improvements, were acquired during the years 1999 through 2015.

Operating leases:

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


		Balance December 31, 2014		Additions		Reclassifications or Dispositions		Balance December 31, 2015
Transportation, rail	$	14,263	$	143	$	308	$	14,714
Containers		11,603		-		(2,635)		8,968
Other		350		-		(350)		-
		26,216		143		(2,677)		23,682
Less accumulated depreciation		(22,519)		(317)		2,346		(20,490)
Total	$	3,697	$	(174)	$	(331)	$	3,192

The average estimated residual value for assets on operating leases was 11% of the assets’ original cost at both December 31, 2015 and 2014.

The Company earns 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 $1.3 million and $1.5 million for the years ended December 31, 2015 and 2014, respectively.

As of December 31, 2015 and 2014, the Company had no operating leases in non-accrual status.

Direct financing leases:

During December 2014, aviation equipment formerly leased under an operating lease contract was re-leased as a direct financing lease. Such equipment comprised the Fund’s total investment in direct financing leases as of December 31, 2015 and 2014. The following lists the components of the Company’s investment in direct financing leases as of December 31, 2015 and 2014 (in thousands):


		2015		2014
Total minimum lease payments receivable	$	6	$	28
Estimated residual values of leased equipment (unguaranteed)		10		10
Investment in direct financing leases		16		38
Less unearned income		(4)		(20)
Net investment in direct financing leases	$	12	$	18

At December 31, 2015, the aggregate amount of future minimum lease payments receivable is as follows (in thousands):


		Operating Leases		Direct Financing Leases		Total
Year ending December 31, 2016	$	2,062	$	6	$	2,068
2017		1,644		-		1,644
2018		1,285		-		1,285
2019		1,016		-		1,016
2020		283		-		283
	$	6,290	$	6	$	6,296

The useful lives for each category of leases is reviewed at a minimum of once per quarter. As of December 31, 2015 and 2014, the respective useful lives of each category of lease assets in the Company’s portfolio are as follows (in years):


Equipment category		Useful Life
Transportation, rail		35 - 40
Containers		20 - 30
Aviation equipment		15 - 20