4. Investments in equipment and leases, net:

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


		Balance December 31, 2015		Reclassifications & Additions / Dispositions		Depreciation/ Amortization Expense or Amortization of Leases		Balance December 31, 2016
Net investment in operating leases	$	3,192	$	(148)	$	(287)	$	2,757
Net investment in direct financing leases		12		(10)		(2)		-
Assets held for sale or lease, net		720		(23)		-		697
Initial direct cost, net of accumulated amortization of $1 at December 31, 2016		-		13		(1)		12
Total	$	3,924	$	(168)	$	(290)	$	3,466

Impairment of investments in leases:

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 2016 and 2015.

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 $287 thousand and $317 thousand for the years ended December 31, 2016 and 2015, respectively. The Company had $1 thousand IDC amortization expense related to operating or direct financing leases for 2016 and there was no IDC amortization expense related to operating or direct financing leases for 2015.

All of the Company’s lease asset purchases and capital improvements were made during the years from 1999 through 2015.

Operating leases:

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


		Balance December 31, 2015		Additions		Reclassifications or Dispositions		Balance December 31, 2016
Transportation, rail	$	14,714	$	-	$	397	$	15,111
Containers		8,968		-		(1,998)		6,970
Aviation		-		-		11		11
		23,682		-		(1,590)		22,092
Less accumulated depreciation		(20,490)		(287)		1,442		(19,335)
Total	$	3,192	$	(287)	$	(148)	$	2,757

The average estimated residual value for assets on operating leases were 12% and 11% of the assets’ original cost at December 31, 2016 and 2015, respectively. There were no operating leases in non-accrual status at both December 31, 2016 and 2015.

Direct financing leases:

As of December 31, 2016, the company had no investment in direct financing leases.

The components of the Company’s investment in direct financing leases as of December 31, 2015 are as follows (in thousands):


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

At December 31, 2016, the aggregate amounts of future minimum lease payments receivable are as follows (in thousands):


		Operating Leases
Year ending December 31, 2017	$	1,795
2018		1,371
2019		1,106
2020		377
2021		48
	$	4,697

The useful lives for each category of leases is reviewed at a minimum of once per quarter. As of December 31, 2016 and 2015, 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
Aviation equipment		15 - 20
Containers		15 - 20