Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Mar. 28, 2016 | Jun. 30, 2015 | |
Document and Entity Information: | |||
Entity Registrant Name | COMMONWEALTH INCOME & GROWTH FUND VI | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Trading Symbol | cigf6 | ||
Amendment Flag | false | ||
Entity Central Index Key | 1,351,901 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Common Stock, Shares Outstanding | 1,792,124 | ||
Entity Public Float | $ 0 | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Current Reporting Status | No | ||
Entity Voluntary Filers | No | ||
Entity Well-known Seasoned Issuer | No | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY | ||
Entity Incorporation, State Country Name | Commonwealth of Pennsylvania | ||
Entity Incorporation, Date of Incorporation | Jan. 6, 2006 |
Balance Sheets
Balance Sheets - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 | ||
Current Assets | ||||
Cash and cash equivalents | $ 20,855 | $ 148,748 | ||
Lease income receivable, net of reserve | 208,761 | [1] | 145,093 | [2] |
Accounts receivable - Commonwealth Capital Corp., net | 829,224 | 324,754 | ||
Other receivables | 22,775 | 3,494 | ||
Prepaid expenses | 1,967 | 2,543 | ||
Current Assets | 1,083,582 | 624,632 | ||
Net Investment in Finance Leases | 102,615 | 141,327 | ||
Equipment, at cost | 9,308,099 | 12,514,225 | ||
Accumulated depreciation | (8,204,315) | (9,853,504) | ||
Technology equipment, net | 1,103,784 | 2,660,721 | ||
Equipment acquisition costs and deferred expenses | 27,608 | [3] | 72,708 | [4] |
Total acquisition costs | 27,608 | 72,708 | ||
Total Assets | 2,317,589 | 3,499,388 | ||
LIABILITIES | ||||
Accounts payable | 167,801 | 125,731 | ||
Accounts Payable - CIGF, Inc., net | 119,638 | 347,209 | ||
Other accrued expenses | 18,365 | 216,014 | ||
Unearned lease income | 62,650 | 89,464 | ||
Notes payable | 367,801 | 690,550 | ||
Total Liabilities | 736,255 | 1,468,968 | ||
PARTNERS' CAPITAL | ||||
General Partner | 1,000 | 1,000 | ||
Limited Partners | 1,580,334 | 2,029,420 | ||
Total Partners' Capital | 1,581,334 | 2,030,420 | ||
Total Liabilities and Partners' Capital | $ 2,317,589 | $ 3,499,388 | ||
[1] | Net of reserve of approximately $38,000. | |||
[2] | Net of reserve of approximately $37,000. | |||
[3] | Net of accumulated amortization of approximately $60,000. | |||
[4] | Net of accumulated amortization of approximately $125,000. |
Balance Sheets - Parenthetical
Balance Sheets - Parenthetical - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Balance Sheets | ||
Lease income receivable, reserve | $ 38,000 | $ 37,000 |
Land, Buildings, Equipment and Leasehold Improvements, accumulated depreciation and amortization | $ 60,000 | $ 125,000 |
Statements of Operations
Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Revenue | ||
Lease | $ 1,888,156 | $ 3,087,970 |
Interest and other | 12,326 | 38,132 |
Gain (loss) on sale of equipment | 272,617 | 85,100 |
Total revenue and gain on sale of equipment | 2,173,099 | 3,211,202 |
Expenses | ||
Operating, excluding depreciation | 538,994 | 739,841 |
SEC restitution settlement, General Partner | 95,316 | 155,210 |
Equipment management fee, General Partner | 20,249 | 21,195 |
Interest | 1,365,705 | 2,244,578 |
Depreciation | 47,319 | 82,599 |
Amortization of equipment acquisition costs and deferred expenses | (236,209) | |
Bad debt recovery | 1,831,374 | 3,243,423 |
Total expenses | 538,994 | 739,841 |
Other income (loss) | ||
Gain from insurance recovery | 100,652 | |
Total other income (loss) | 100,652 | |
Net Income (Loss) | 341,725 | 68,431 |
Net Income (Loss) allocated to Limited Partners | $ 333,946 | $ 44,580 |
Net Income (Loss) per equivalent Limited Partnership unit | $ 0.19 | $ 0.02 |
Weighted average number of equivalent limited partnership units outstanding during the period | 1,793,599 | 1,795,773 |
Statements of Partners' Capital
Statements of Partners' Capital - USD ($) | General Partners | Limited Partners | Total |
Partners' Capital at Dec. 31, 2013 | $ 1,000 | $ 4,349,547 | $ 4,350,547 |
Partners' Capital Account, Units at Dec. 31, 2013 | 50 | 1,796,107 | |
Partners' Capital Account, Redemptions | $ (3,411) | $ (3,411) | |
Partners' Capital Account, Units, Redeemed | (565) | 565 | |
Net Income (Loss) | $ 23,851 | $ 44,580 | $ 68,431 |
Distributions to Partners | (23,851) | (2,361,296) | (2,385,147) |
Partners' Capital at Dec. 31, 2014 | $ 1,000 | $ 2,029,420 | 2,030,420 |
Partners' Capital Account, Units at Dec. 31, 2014 | 50 | 1,795,542 | |
Partners' Capital Account, Redemptions | $ (12,943) | $ (12,943) | |
Partners' Capital Account, Units, Redeemed | (3,468) | 3,468 | |
Net Income (Loss) | $ 7,779 | $ 333,946 | $ 341,725 |
Distributions to Partners | (7,779) | (770,089) | (777,868) |
Partners' Capital at Dec. 31, 2015 | $ 1,000 | $ 1,580,334 | $ 1,581,334 |
Partners' Capital Account, Units at Dec. 31, 2015 | 50 | 1,792,074 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities | ||
Net Income (Loss) | $ 341,725 | $ 68,431 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities | ||
Depreciation and amortization | 1,413,024 | 2,327,177 |
Bad debt recovery | (236,209) | |
Gain (loss) on sale of equipment | (272,617) | (85,100) |
Other noncash activities | ||
Lease revenue net of interest expense, on notes payable, realized as a result of direct payment of principal to bank by lessee | (360,217) | (365,498) |
Amortization of initial direct costs | 2,043 | 2,399 |
Earned interest on finance leases | (8,733) | (10,262) |
Lease income receivable | 172,541 | 157,282 |
Accounts receivable, Commonwealth Capital Corp., net | (504,470) | 104,032 |
Other receivables | (19,281) | (719) |
Prepaid expenses | 576 | (1,543) |
Accounts payable | 42,064 | 27,937 |
Accounts payable, CIGF, Inc., net | (227,571) | 281,654 |
Other accrued expenses | (197,643) | (103,084) |
Unearned lease income | (26,814) | (13,611) |
Net cash provided by (used in) operating activities | 118,418 | 2,389,095 |
Cash flows from investing activities | ||
Capital expenditures | (8,639) | (302,887) |
Purchase of finance leases | (73,033) | |
Payments received from finance leases | 45,402 | 40,588 |
Equipment acquisition fees paid to General Partner | (1,844) | (34,021) |
Net proceeds from the sale of equipment | 509,956 | 287,768 |
Net cash provided by (used in) investing activities | 544,875 | (81,585) |
Cash flows from financing activities | ||
Redemptions | (12,943) | (3,411) |
Distributions to partners | (777,868) | (2,176,022) |
Debt placement fees paid to General Partner | (375) | (8,822) |
Net cash provided by (used in) financing activities | (791,186) | (2,188,255) |
Net (decrease) in cash and cash equivalents | (127,893) | 119,255 |
Cash and cash equivalents beginning of period | 148,748 | 29,493 |
Cash and cash equivalents end of period | $ 20,855 | $ 148,748 |
Business
Business | 12 Months Ended |
Dec. 31, 2015 | |
Notes | |
Business | 1. Business Commonwealth Income & Growth Fund VI (the Partnership) is a limited partnership organized in the Commonwealth of Pennsylvania on January 6, 2006. The Partnership offered for sale up to 2,500,000 units of limited partnership interest at the purchase price of $20 per unit (the offering). The Partnership reached the minimum amount in escrow and commenced operations on May 10, 2007. The offering terminated on March 6, 2009 with 1,810,311 units sold for a total of approximately $36,000,000 in limited partner contributions. During the years ended December 31, 2015 and 2014, limited partners redeemed 3,468 and 565 units of partnership interest for a total redemption price of approximately $13,000 and $3,000, respectively, in accordance with the terms of the Partnerships Limited Partnership Agreement (the Agreement) The Partnership used the proceeds of the offering to acquire, own and lease various types of computer information technology equipment and other similar capital equipment, which is leased primarily to U.S. corporations and institutions. Commonwealth Capital Corp. (CCC), on behalf of the Partnership and other affiliated partnerships, acquires computer equipment subject to associated debt obligations and lease agreements and allocates a participation in the cost, debt and lease revenue to the various partnerships based on certain risk factors. The Partnerships investment objective is to acquire primarily high technology equipment. Information technology has developed rapidly in recent years and is expected to continue to do so. Technological advances have permitted reductions in the cost of information technology processing capacity, speed, and utility. In the future, the rate and nature of equipment development may cause equipment to become obsolete more rapidly. The Partnership also acquires high technology medical, telecommunications and inventory management equipment. The Partnerships General Partner will seek to maintain an appropriate balance and diversity in the types of equipment acquired. The market for high technology medical equipment is growing each year. Generally, this type of equipment will have a longer useful life than other types of technology equipment. This allows for increased re-marketability, if it is returned before its economic or announcement cycle is depleted. The Partnerships General Partner is Commonwealth Income & Growth Fund, Inc. (the General Partner), a Pennsylvania corporation which is an indirect wholly-owned subsidiary of CCC. CCC is a member of the Investment Program Association (IPA), REISA, Financial Planning Association (FPA), and the Equipment Leasing and Finance Association (ELFA). Approximately ten years after the commencement of operations, the Partnership intends to sell or otherwise dispose of all of its equipment, make final distributions to partners, and to dissolve. Unless sooner terminated or extended pursuant to the terms of the Agreement, the Partnership will continue until December 31, 2018. Allocations of income and distributions of cash are based on the Agreement. The various allocations under the Agreement prevent any limited partners capital account from being reduced below zero and ensure the capital accounts reflect the anticipated sharing ratios of cash distributions, as defined in the Agreement. During years ended December 31, 2015 and 2014, cash distributions to limited partners were made at a rate of approximately 2% and 7%, respectively, of their original contributed capital. Distributions during the years ended December 31, 2015 and 2014 were made to limited partners in the amount of approximately $.43 and $1.31, respectively, per unit based on each investors number of limited partnership units outstanding during the year. In an effort to increase cash flow, the General Partner suspended limited partner distributions for the fourth quarter of 2015. The General Partner will reassess the funding of limited partner distributions for 2016. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2015 | |
Notes | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Use of Estimates The preparation of financial statements is in conformity with accounting principles generally accepted in the United States of America which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Such estimates relate primarily to the determination of residual values at the end of the lease term, the expected future cash flows and fair value used for impairment analysis purposes and determination of the allowance for doubtful accounts. Disclosure of Fair Value Fair Value Measurements The Partnership applies the provisions included in the Fair Value Measurements and Disclosures Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities. Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3: Unobservable inputs for which there is little or no market data and which require internal development of assumptions about how market participants price the asset or liability. There were no assets or liabilities measured at fair value on a recurring basis at December 31, 2015 and 2014. There were no assets measured on a non-recurring basis at December 31, 2015. Fair Value Measurements on a nonrecurring basis as of December 31, 2014 is as follows: Fair Value as of December 31, 2014 Fair Value Measurements Using Fair Value Hierarchy Level 1 Level 2 Level 3 Assets Equipment $75,000 $-- $75,000 $-- Equipment is measured at fair value on a non-recurring basis in conjunction with the Partnerships impairment analysis. There were no impairment charges recorded in 2015. An impairment charge of approximately $41,000 was recorded for equipment written down to fair value in 2014, as a component of depreciation expense in the accompanying statements of operations. The fair value of equipment was calculated using a market approach for 2014. The market approach utilized third party appraisals or comparable sales of similar assets which are inputs classified as level 2 within the fair value hierarchy. Fair Value disclosures of financial instruments Estimated fair value was determined by management using available market information and appropriate valuation methodologies. However, judgment was necessary to interpret market data and develop estimated fair value. Cash, receivables, accounts payable and accrued expenses and other liabilities are carried at amounts which reasonably approximate their fair values as of December 31, 2015 and 2014 due to the immediate or short-term nature of these financial instruments. The Partnerships long-term debt consists of notes payable, which are secured by specific equipment and are nonrecourse liabilities of the Partnership. The estimated fair value of this debt at December 31, 2015 and 2014 approximates the carrying value of these instruments, due to the interest rates on this debt approximating current market interest rates. The Partnership classifies the fair value of its notes payable within Level 2 of the valuation hierarchy based on the observable inputs used to estimate fair value. Revenue Recognition For the year ended December 31, 2015, the Partnerships lease portfolio consisted of operating leases and finance leases. For operating leases, lease revenue is recognized on a straight-line basis in accordance with the terms of the lease agreement. Finance lease interest income is recorded over the term of the lease using the effective interest method. For finance leases, we record, at lease inception, unearned finance lease income which is calculated as follows: total lease payments, plus any residual value and initial direct costs, less the cost of the leased equipment. Upon the end of the lease term, if the lessee has not met the return conditions as set out in the lease, the Partnership is entitled in certain cases to additional compensation from the lessee. The Partnerships accounting policy for recording such payments is to treat them as revenue. Gains or losses from sales of leased and off-lease equipment are recorded on a net basis in the Partnerships Statement of Operations. Gains from the termination of leases are recognized when the lease is modified and terminated concurrently. Gains from lease termination included in lease revenue for the year ended December 31, 2015 and 2014, was approximately $90,000 and $185,000, respectively. Our leases do not contain any step-rent provisions or escalation clauses nor are lease revenues adjusted based on any index. Other Assets Equipment acquisition costs and deferred expenses are amortized on a straight-line basis over two-to-four year lives based on the original term of the lease and loan, respectively. Unamortized acquisition costs and deferred expenses are charged to amortization expense when the associated leased equipment is sold. Long-Lived Assets Depreciation on technology and inventory management equipment for financial statement purposes is based on the straight-line method estimated generally over useful lives of two to four years. Once an asset comes off lease or is released, the Partnership reassesses the useful life of an asset. The Partnership evaluates its long-lived assets when events or circumstances indicate that the value of the asset may not be recoverable. The Partnership determines whether impairment exists by estimating the undiscounted cash flows to be generated by each asset. If the estimated undiscounted cash flows are less than the carrying value of the asset then impairment exists. The amount of the impairment is determined based on the difference between the carrying value and the fair value. Fair value is determined based on estimated discounted cash flows to be generated by the asset, third party appraisals or comparable sales of similar assets, as applicable, based on asset type. There were no impairment charges recorded in 2015. An impairment charge of approximately $41,000 was recorded for equipment written down to fair value in 2014, as a component of depreciation expense in the accompanying statements of operations. Residual values are determined by management and are calculated using information from both internal and external sources, as well as other economic indicators. Reimbursable Expenses Reimbursable expenses are comprised of both ongoing operational expenses and fees associated with the allocation of salaries and benefits, referred to as other LP expenses. Reimbursable expenses, which are charged to the Partnership by CCC in connection with the administration and operation of the Partnership, are allocated to the Partnership based upon several factors including, but not limited to, the number of investors, leasing volume and stage of the program. For example, if a partnership has more investors than another program sponsored by CCC, then higher amounts of expenses related to investor services, including mailing and printing costs will be allocated to that partnership. Also, while a partnership is in its offering stage, higher compliance costs are allocated to it than to a program not in its offering stage, as compliance resources are utilized to review incoming investor suitability and proper documentation. Finally, lease related expenses, such as due diligence, correspondence, collection efforts and analysis and staff costs, increase as programs purchase more leases, and decrease as leases terminate and equipment is sold. All of these factors contribute to CCCs determination as to the amount of expenses to allocate to the Partnership or to other sponsored programs. CCC is not reimbursed for salary and benefit costs of control persons. For the Partnership, all reimbursable items are expensed as they are incurred. Lease Income Receivable Lease income receivable includes current lease income receivable net of allowances for uncollectible amounts, if any. The Partnership monitors lease income receivable to ensure timely and accurate payment by lessees. The Partnerships Lease Relations department is responsible for monitoring lease income receivable and, as necessary, resolving outstanding invoices. The Partnership reviews a customers credit history before extending credit. When the analysis indicates that the probability of full collection is unlikely, the Partnership may establish an allowance for uncollectible lease income receivable based upon the credit risk of specific customers, historical trends and other information. The Partnership writes off its lease income receivable when it determines that it is uncollectible and all economically sensible means of recovery have been exhausted. Cash and cash equivalents We consider cash and cash equivalents to be cash on hand and highly liquid investments with an original maturity of 90 days or less. At December 31, 2015, cash was held in a total of two accounts maintained at one financial institution with an aggregate balance of approximately $22,000. Bank accounts are federally insured up to $250,000 by the FDIC. At December 31, 2015 and 2014, the aggregate cash balances were as follows: Balance at December 31, 2015 2014 Total bank balance $ 22,000 $ 151,000 FDIC insured $ (22,000) $ (151,000) Uninsured amount $ - $ - The Partnership's deposits are fully insured by the FDIC. The Partnership has not experienced any losses in our accounts, and believes it is not exposed to any significant credit risk. The amounts in such accounts will fluctuate throughout 2016 due to many factors, including cash receipts, interest rates and distributions to limited partners. Income Taxes Pursuant to the provisions of Section 701 of the Internal Revenue Code, the Partnership is not subject to federal income taxes. All income and losses of the Partnership are the liability of the individual partners and are allocated to the partners for inclusion in their individual tax returns. The Partnership does not have any entity-level uncertain tax positions. In addition, the Partnership believes its tax status as a pass-through entity would be sustained under U.S. Federal, state or local tax examination. The Partnership files U.S. federal and various state income tax returns and is generally subject to examination by federal, state and local income tax authorities for three years from the filing of a tax return. Taxable income differs from financial statement net income as a result of reporting certain income and expense items for tax purposes in periods other than those used for financial statement purposes, principally relating to depreciation, amortization, and lease revenue. Net Income Per Equivalent Limited Partnership Unit The net income per equivalent limited partnership unit is computed based upon net income allocated to the limited partners and the weighted average number of equivalent units outstanding during the period. Recent Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) Section A--Leases: Amendments to the FASB Accounting Standards Codification® Section B--Conforming Amendments Related to Leases: Amendments to the FASB Accounting Standards Codification® Section C--Background Information and Basis for Conclusions In January 2016, the FASB issued Accounting Standards Update No. 2016-01, Financial Instruments--Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities In August 2015, the FASB issued Accounting Standards Update No. 2015-14, R evenue from Contracts with Customers (Topic 606): Deferral of the Effective Date In June 2015, the FASB issued Accounting Standards Update No. 2015-10, Technical Corrections and Improvements- In February 2015, the FASB issued Accounting Standards Update No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis- In January 2015, the FASB issued Accounting Standards Update No. 2015-01, Income Statement--Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items . In August 2014, the FASB issued Accounting Standards Update No. 2014 -15, Disclosure of Uncertainties about an Entitys Ability to Continue as a Going Concern In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers In April 2014, the FASB issued ASU No. 2014-08 (ASU Updated 2014-08), Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity |
Capital Equipment
Capital Equipment | 12 Months Ended |
Dec. 31, 2015 | |
Notes | |
Capital Equipment | 3. Information Technology, Medical Technology, Telecommunications Technology, Inventory Management and Other Business-Essential Capital Equipment (Equipment) The Partnership is the lessor of equipment under leases with periods generally ranging from 12 to 48 months. In general, associated costs such as repairs and maintenance, insurance and property taxes are paid by the lessee. Remarketing fees will be paid to the leasing companies from which the Partnership purchases leases. These are fees that are earned by the leasing companies when the initial terms of the lease have been met. The General Partner believes that this strategy adds value since it entices the leasing company to remain actively involved with the lessees and encourages potential extensions, remarketing or sale of equipment. This strategy is designed to minimize conflicts the leasing company may have with a new lessee and may assist in maximizing overall portfolio performance. The remarketing fee is tied into lease performance thresholds and is a factor in the negotiation of the fee. Remarketing fees incurred in connection with lease extensions are accounted for as operating costs. Remarketing fees incurred in connection with the sale of equipment are included in the gain or loss calculations. For the years ended December 31, 2015 and 2014, approximately $6,000 of remarketing fees were incurred per year. For the years ended December 31, 2015 and 2014, there were no remarketing fees paid with cash and/or netted against receivables due from such parties. The Partnership recorded an impairment charge of approximately $41,000 at December 31, 2014 as impairment indicators were noted, and is included in depreciation expense in the accompanying financial statements. There were no impairment charges recorded in 2015. In December 2014, a significant lessee, ALSC, breached its Master Lease Agreement (MLA) scheduled to terminate in December 2015 and defaulted on its lease payments for equipment shared by the Partnership and other affiliated Funds. On December 4, 2014, ALSC filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. On April 2, 2015, CCC, on behalf of the Funds, entered into a settlement agreement with the parent company of ALSC for $3,500,000. The Partnerships share of this settlement was approximately $83,000 of which $69,000 was recorded as a gain on termination of leases in the second quarter of 2015. In addition, the Bankruptcy Court ordered the release of all equipment leased to ALSC under the MLA to the Partnerships. In January 2015, CCC, on behalf of the Funds, entered into a Purchase Agreement for the sale of the equipment to Medshare Technologies (see note 8 - Medshare). Gains or losses from sales of leased and off-lease equipment are recorded on a net basis in the Partnerships Statement of Operations. Gains from the termination of leases are recognized when the lease is modified and terminated concurrently. Gains from lease termination included in lease revenue for the year ended December 31, 2015 and 2014, was approximately $90,000 and $185,000, respectively. CCC, on behalf of the Partnership and on behalf of other affiliated companies and partnerships (partnerships), acquires equipment subject to associated debt obligations and lease agreements and allocates a participation in the cost, debt and lease revenue to the various companies based on certain risk factors. The Partnerships share of the cost of the equipment in which it participates with other partnerships at December 31, 2015 was approximately $5,111,000 and is included in the Partnerships equipment on its balance sheet. The total cost of the equipment shared by the Partnership with other partnerships at December 31, 2015 was approximately $11,246,000. The Partnerships share of the outstanding debt associated with this equipment at December 31, 2015 was approximately $214,000 and is included in the Partnerships notes payable on its balance sheet. The total outstanding debt related to the equipment shared by the Partnership at December 31, 2015 was approximately $660,000. The Partnerships share of the cost of the equipment in which it participates with other partnerships at December 31, 2014 was approximately $6,006,000 and is included in the Partnerships equipment on its balance sheet. The total cost of the equipment shared by the Partnership with other partnerships at December 31, 2014 was approximately $13,135,000. The Partnerships share of the outstanding debt associated with this equipment at December 31, 2014 was approximately $471,000 and is included in the Partnerships notes payable on its balance sheet. The total outstanding debt related to the equipment shared by the Partnership at December 31, 2014 was approximately $1,443,000. As the Partnership and the other programs managed by the General Partner increase their overall portfolio size, opportunities for shared participation are expected to continue. Sharing in the acquisition of a lease portfolio gives the Partnership an opportunity to acquire additional assets and revenue streams, while allowing the Partnership to remain diversified and reducing its overall risk with respect to one portfolio. Thus, total shared equipment and related debt should continue throughout 2016 as the Partnership continues to acquire equipment for its portfolio. The following is a schedule of future minimum rentals on non-cancelable operating leases at December 31, 2015: Years Ended December 31, Amount 2016 $ 557,000 2017 105,000 2018 3,000 $ Finance Leases The following lists the components of the net investment in direct financing leases: At December 31, 2015 2014 Total minimum lease payments to be received 89,000 135,000 Initial direct costs 2,000 4,000 Allowance for bad debt - - Estimated residual value of leased equipment (unguaranteed) 20,000 19,000 Less: unearned income (8,000) (17,000) Net investment in direct finance leases 103,000 141,000 Our finance lease customers operate in various industries, and we have no significant customer concentration in any one industry. We assess credit risk for all of our customers, including those that lease under finance leases. This credit risk is assessed using an internally developed model which incorporates credits scores from third party providers and our own customer risk ratings and is periodically reviewed. Our internal ratings are weighted based on the industry that the customer operates in. Factors taken into consideration when assessing risk, includes both general and industry specific qualitative and quantitative metrics. We separately take in to consideration payment history, open lawsuits, liens and judgments. Typically, we will not extend credit to a company that has been in business for less than 5 years or that has filed for bankruptcy within the same period. Our internally based model may classify a company as high risk based on our analysis of their audited financial statements and their payment history. Additional considerations of high risk may include history of late payments, open lawsuits and liens or judgments. In an effort to mitigate risk, we typically require deposits from those in this category. A reserve for credit losses is deemed necessary when payment has not been received for one or more months of receivables due on the equipment held under finance leases. At the end of each period, management evaluates the open receivables due on this equipment and determines the need for a reserve based on payment history and any current factors that would have an impact on payments. The following table presents the credit risk profile, by creditworthiness category, of our finance lease receivables at December 31, 2015: Risk Level Percent of Total Low -% Moderate-Low -% Moderate -% Moderate-High 100% High -% Net finance lease receivable 100% As of December 31, 2015, we determined that we did not have a need for an allowance for uncollectible accounts associated with any of our finance leases, as the customer payment histories with us, associated with these leases, has been positive, with no late payments. The following is a schedule of future minimum rentals on non-cancelable finance leases: At December 31, Amount 2016 45,000 2017 39,000 2018 5,000 $ 89,000 |
Significant Customers
Significant Customers | 12 Months Ended |
Dec. 31, 2015 | |
Notes | |
Significant Customers | 4. Significant Customers Lessees equal to or exceeding 10% of lease revenue: Years Ended December 31, 2015 2014 Cummins, Inc. 29% 22% Aetna Life Insurance 15% 17% Verso Paper 13% **% Cargill, Inc. 12% 12% Alliant Techsystems 11% 11% ** Represents less than 10% of lease revenue Lessees equal to or exceeding 10% of net lease income receivable: At December 31, 2015 2014 Cummins, Inc. 51% **% Cargill, Inc 34% 26% Motorola, Inc. **% 27% Alliant Techsystems **% 11% ** Represents less than 10% of lease income receivable |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2015 | |
Notes | |
Related Party Transactions | 5. Related Party Transactions Receivables/Payables As of December 31, 2015 the Partnerships related party receivables and payables are short term, unsecured, and non-interest bearing. ENTITY RECEIVING COMPENSATION TYPE OF COMPENSATION AMOUNT INCURRED DURING 2015 AMOUNT INCURRED DURING 2014 OPERATIONAL AND SALE OR LIQUIDATION STAGES The General Partner Equipment Acquisition Fee $ 2,000 $ 34,000 The General Partner and its Affiliates Reimbursable Expenses $ 531,000 $ 628,000 The General Partner Debt Placement Fee $ - $ 9,000 The General Partner Equipment Management Fee $ 95,000 $ 155,000 The General Partner Equipment Liquidation Fee $ 4,000 $ 9,000 The General Partner Partnership Interest and Distribution $ 8,000 $ 24,000 6. Notes Payable Notes payable consisted approximately of the following: At December 31, 2015 2014 Installment note payable to bank; interest rate of 4.23%, due in quarterly installments of $10,311 including interest with final payment in September 2015 $ - $ 30,000 Installment note payable to bank; interest rate of 4.23%, due in quarterly installments of $5,665, including interest, with final payment in June 2016 11,000 33,000 Installment note payable to bank; interest rate of 4.85%, due in quarterly installments of $35,894, including interest, with final payment in August 2016 105,000 240,000 Installment note payable to bank; interest rate of 4.23%, due in quarterly installments of $6,288, including interest, with final payment in December 2016 25,000 48,000 Installment note payable to bank; interest rate of 1.60%, due in monthly installments of $2,775, including interest, with final payment in March 2017 41,000 74,000 Installment note payable to bank; interest rate of 1.60%, due in monthly installments of $5,138, including interest, with final payment in April 2017 81,000 141,000 Installment note payable to bank; interest rate of 4.85%, due in quarterly installments of $7,699, including interest, with final payment in July 2017 52,000 87,000 Installment note payable to bank; interest rate of 4.23%, due in quarterly installments of $420, including interest, with final payment in August 2017 3,000 5,000 Installment note payable to bank; interest rate of 4.88%, due in monthly installments of $1,058, including interest, with final payment in October 2017 22,000 33,000 Installment notes payable to bank; interest rate of 4.23%, due in quarterly installments ranging from $1,370 to $1,927, including interest, with final payment in February 2018 28,000 - $ 368,000 $ 691,000 The notes are secured by specific equipment with a carrying value of approximately $656,000 and are nonrecourse liabilities of the Partnership. As such, the notes do not contain any financial debt covenants with which we must comply on either an annual or quarterly basis. Aggregate payments of notes payable for each of the periods subsequent to December 31, 2015 are as follows: Years Ended December 31, Amount 2016 $ 289,000 2017 76,000 2018 3,000 $ 368,000 |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 12 Months Ended |
Dec. 31, 2015 | |
Notes | |
Supplemental Cash Flow Information | 7. Supplemental Cash Flow Information Other noncash activities included in the determination of net loss are as follows: No interest or principal on notes payable was paid by the Partnership because direct payment was made by the lessee to the bank in lieu of collection of lease income and payment of interest and principal by the Partnership. Noncash investing and financing activities include the following: Years Ended December 31, 2015 2014 Debt assumed in connection with purchase of equipment $ 37,000 $ 475,000 Debt assumed and satisfaction of accrued expenses in 2014 in connection with acquisition of equipment in 2013 $ - $ 408,000 Accrual for distribution to partners paid in January 2015 $ - $ 209,000 During the years ended December 31, 2015 and 2014, the Partnership wrote-off fully amortized acquisition and finance fees of approximately $112,000 and $144,000, respectively. During the years ended December 31, 2015 and 2014, the Partnership wrote-off fully reserved lease income receivable of approximately $4,000 and $5,000, respectively. During the years ended December 31, 2015 and 2014, the Partnership wrote-off fully depreciated assets of approximately $0 and $403,000, respectively. For the years ended December 31, 2015 and 2014, the Partnership recorded impairment charges of approximately $0 and $41,000, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2015 | |
Notes | |
Commitments and Contingencies | 8. Commitments and Contingencies Allied Health Care Services As previously disclosed in the Partnerships Annual Report on Form 10-K for the year ended December 31, 2014, management wrote off the fully reserved accounts receivable and fully impaired assets related to the lease to Allied Health Care Services, Inc. (Allied), due to the bankruptcy of Allied and the criminal conviction of its founder for fraud. There have been no material changes in the status of Allieds bankruptcy or in the likelihood of recovering available assets since the date of the Partnerships annual report. The deadline for the bankruptcy trustee to pursue adversary claims against certain creditors has expired, including extensions. The bankruptcy trustee cannot seek to claim the Partnership's payments received from Allied, therefore the Partnership has no exposure to such potential claims. Commonwealth continues to pursue all of our rights against both Allied and Mr. Schwartz to recover any available assets to the greatest extent possible. During 2015, Commonwealth received an Allied bankruptcy settlement of approximately $448,000. The Partnerships portion was approximately $242,000, which is included as a bad debt recovery in the statement of financial operations. The bankruptcy proceedings have been finalized and no further recovery is expected. Medshare In January 2015, CCC, on behalf of the Funds, entered into a Purchase Agreement (Purchase Agreement) for the sale of the equipment to Medshare Technologies (Medshare) for approximately $3,400,000. The Partnerships share of the sale proceeds was approximately $77,000. As of December 31, 2015, the Partnership has received approximately $52,000 of the approximate $77,000 sale proceeds and has recorded a reserve against the outstanding receivable of $5,000. On April 3, 2015 Medshare was obligated to make payment in full and failed to do so. As a result, Medshare defaulted on its purchase agreement with CCC and was issued a demand letter for full payment of the Equipment. On June 25, 2015, Medshare filed a lawsuit in Texas state court for breach of contract (State Suit). On June 26, 2015, Commonwealth filed a lawsuit in the Northern District of Texas against Medshare seeking payment in full and/or return of the Equipment and damages. The State Suit was removed to federal court and the Judge has stated that money damages are sufficient and Medshare is to honor the agreement and satisfy the outstanding receivable owed to CCC. The parties are currently in the discovery phase. Based on discussions with counsel, management believes that the likelihood of loss is remote. As such, management believes that resolution of the lawsuits will not result in any adverse financial impact on the Funds, but no assurance can be provided until the proceeding is resolved. FINRA On May 3, 2013, the FINRA Department of Enforcement filed a complaint naming Commonwealth Capital Securities Corp. (CCSC) and the owner of the firm, Kimberly Springsteen-Abbott, as respondents; however on October 22, 2013, FINRA filed an amended complaint that dropped the allegations against CCSC and reduced the scope of the allegations against Ms. Springsteen-Abbott. The sole remaining charge was that Ms. Springsteen-Abbott had approved the misallocation of some expenses to certain Funds. Management believes that the expenses at issue include amounts that were proper and that were properly allocated to Funds, and also identified a smaller number of expenses that had been allocated in error, but were adjusted and repaid to the affected Funds when they were identified in 2012. During the period in question, Commonwealth Capital Corp. (CCC) and Ms. Springsteen-Abbott provided important financial support to the Funds, voluntarily absorbed expenses and voluntarily waived fees in amounts aggregating in excess of any questioned allocations. That Panel ruled on March 30, 2015, that Ms. Springsteen-Abbott should be barred from the securities industry because the Panel concluded that she allegedly misallocated $208,000 of expenses involving certain Funds over the course of three years. As such, management has allocated approximately $87,000 of the $208,000 in allegedly misallocated expenses back to the affected funds as a contingency accrual in CCCs financial statements and a good faith payment for the benefit of those Income Funds. The Partnerships share of the approximate $87,000 allocation is approximately $21,000. An adjustment of approximately $21,000 was made to the Partnerships June 30, 2015 financial statements resulting in an increase to accounts receivable, Commonwealth Capital Corp. and a reduction of an equal amount to operating expenses. Decisions issued by FINRA's Office of Hearing Officers may be appealed to FINRA's National Adjudicatory Council (NAC) pursuant to FINRA Rule 9311. In December of 2015, Ms. Springsteen-Abbott vigorously challenged the Panels decision at an appeal hearing that was conducted before a NAC panel. A decision has not been rendered on this matter. While a panel decision is on appeal, the sanction is not enforced against the individual. Management believes that resolution of the appeal will not result in any material adverse financial impact on the Funds, but no assurance can be provided until the FINRA matter is resolved. |
Reconciliation of Amounts Repor
Reconciliation of Amounts Reported For Financial Reporting Purposes To Amounts On The Federal Partnership Return (unaudited) | 12 Months Ended |
Dec. 31, 2015 | |
Notes | |
Reconciliation of Amounts Reported For Financial Reporting Purposes To Amounts On The Federal Partnership Return (unaudited) | 9. Reconciliation of Amounts Reported for Financial Reporting Purposes to Amounts on the Federal Partnership Return (Unaudited) The tax basis of the Partnerships net assets and liabilities vary from the amounts presented in these financial statements at December 31, 2015 and 2014 as follows: Years Ended December 31, 2015 2014 Financial statement basis of net assets $ 1,581,334 $ 2,030,420 Tax basis of net assets (unaudited) 282,796 (189,440) Difference (unaudited) $ (1,298,538) $ (2,219,860) The primary differences between the tax basis of net assets and the amounts recorded in the financial statements are the result of differences in accounting for impairment losses, syndication costs and differences between the depreciation methods used in the financial statements and the Partnerships tax returns (unaudited). Years ended December 31, 2015 2014 Net income for financial reporting purposes to taxable loss $ 341,725 $ 68,431 Adjustments (unaudited) Gain on sale of equipment 131,282 177,058 Depreciation 805,741 727,801 Amortization 28,603 64,078 Unearned lease income (7,892) (24,159) Penalties 1,290 185 Bad debts 533 (4,435) Other (24,012) (17,320) Taxable income on the Federal Partnership return (unaudited) $ 1,277,270 $ 991,639 The Adjustments Other includes financial statement adjustments that will be reflected on the tax return in the subsequent year. |
Summary of Significant Accoun15
Summary of Significant Accounting Policies: Use of Estimates (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Policies | |
Use of Estimates | Use of Estimates The preparation of financial statements is in conformity with accounting principles generally accepted in the United States of America which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Such estimates relate primarily to the determination of residual values at the end of the lease term, the expected future cash flows and fair value used for impairment analysis purposes and determination of the allowance for doubtful accounts. |
Summary of Significant Accoun16
Summary of Significant Accounting Policies: Disclosure of Fair Value of Financial Instruments (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Policies | |
Disclosure of Fair Value of Financial Instruments | Disclosure of Fair Value Fair Value Measurements The Partnership applies the provisions included in the Fair Value Measurements and Disclosures Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities. Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3: Unobservable inputs for which there is little or no market data and which require internal development of assumptions about how market participants price the asset or liability. There were no assets or liabilities measured at fair value on a recurring basis at December 31, 2015 and 2014. There were no assets measured on a non-recurring basis at December 31, 2015. Fair Value Measurements on a nonrecurring basis as of December 31, 2014 is as follows: Fair Value as of December 31, 2014 Fair Value Measurements Using Fair Value Hierarchy Level 1 Level 2 Level 3 Assets Equipment $75,000 $-- $75,000 $-- Equipment is measured at fair value on a non-recurring basis in conjunction with the Partnerships impairment analysis. There were no impairment charges recorded in 2015. An impairment charge of approximately $41,000 was recorded for equipment written down to fair value in 2014, as a component of depreciation expense in the accompanying statements of operations. The fair value of equipment was calculated using a market approach for 2014. The market approach utilized third party appraisals or comparable sales of similar assets which are inputs classified as level 2 within the fair value hierarchy. Fair Value disclosures of financial instruments Estimated fair value was determined by management using available market information and appropriate valuation methodologies. However, judgment was necessary to interpret market data and develop estimated fair value. Cash, receivables, accounts payable and accrued expenses and other liabilities are carried at amounts which reasonably approximate their fair values as of December 31, 2015 and 2014 due to the immediate or short-term nature of these financial instruments. The Partnerships long-term debt consists of notes payable, which are secured by specific equipment and are nonrecourse liabilities of the Partnership. The estimated fair value of this debt at December 31, 2015 and 2014 approximates the carrying value of these instruments, due to the interest rates on this debt approximating current market interest rates. The Partnership classifies the fair value of its notes payable within Level 2 of the valuation hierarchy based on the observable inputs used to estimate fair value. |
Summary of Significant Accoun17
Summary of Significant Accounting Policies: Revenue Recognition (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Policies | |
Revenue Recognition | Revenue Recognition For the year ended December 31, 2015, the Partnerships lease portfolio consisted of operating leases and finance leases. For operating leases, lease revenue is recognized on a straight-line basis in accordance with the terms of the lease agreement. Finance lease interest income is recorded over the term of the lease using the effective interest method. For finance leases, we record, at lease inception, unearned finance lease income which is calculated as follows: total lease payments, plus any residual value and initial direct costs, less the cost of the leased equipment. Upon the end of the lease term, if the lessee has not met the return conditions as set out in the lease, the Partnership is entitled in certain cases to additional compensation from the lessee. The Partnerships accounting policy for recording such payments is to treat them as revenue. Gains or losses from sales of leased and off-lease equipment are recorded on a net basis in the Partnerships Statement of Operations. Gains from the termination of leases are recognized when the lease is modified and terminated concurrently. Gains from lease termination included in lease revenue for the year ended December 31, 2015 and 2014, was approximately $90,000 and $185,000, respectively. Our leases do not contain any step-rent provisions or escalation clauses nor are lease revenues adjusted based on any index. |
Summary of Significant Accoun18
Summary of Significant Accounting Policies: Other Assets (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Policies | |
Other Assets | Other Assets Equipment acquisition costs and deferred expenses are amortized on a straight-line basis over two-to-four year lives based on the original term of the lease and loan, respectively. Unamortized acquisition costs and deferred expenses are charged to amortization expense when the associated leased equipment is sold. |
Summary of Significant Accoun19
Summary of Significant Accounting Policies: Long-lived Assets (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Policies | |
Long-lived Assets | Long-Lived Assets Depreciation on technology and inventory management equipment for financial statement purposes is based on the straight-line method estimated generally over useful lives of two to four years. Once an asset comes off lease or is released, the Partnership reassesses the useful life of an asset. The Partnership evaluates its long-lived assets when events or circumstances indicate that the value of the asset may not be recoverable. The Partnership determines whether impairment exists by estimating the undiscounted cash flows to be generated by each asset. If the estimated undiscounted cash flows are less than the carrying value of the asset then impairment exists. The amount of the impairment is determined based on the difference between the carrying value and the fair value. Fair value is determined based on estimated discounted cash flows to be generated by the asset, third party appraisals or comparable sales of similar assets, as applicable, based on asset type. There were no impairment charges recorded in 2015. An impairment charge of approximately $41,000 was recorded for equipment written down to fair value in 2014, as a component of depreciation expense in the accompanying statements of operations. Residual values are determined by management and are calculated using information from both internal and external sources, as well as other economic indicators. |
Summary of Significant Accoun20
Summary of Significant Accounting Policies: Reimbursable Expenses (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Policies | |
Reimbursable Expenses | Reimbursable Expenses Reimbursable expenses are comprised of both ongoing operational expenses and fees associated with the allocation of salaries and benefits, referred to as other LP expenses. Reimbursable expenses, which are charged to the Partnership by CCC in connection with the administration and operation of the Partnership, are allocated to the Partnership based upon several factors including, but not limited to, the number of investors, leasing volume and stage of the program. For example, if a partnership has more investors than another program sponsored by CCC, then higher amounts of expenses related to investor services, including mailing and printing costs will be allocated to that partnership. Also, while a partnership is in its offering stage, higher compliance costs are allocated to it than to a program not in its offering stage, as compliance resources are utilized to review incoming investor suitability and proper documentation. Finally, lease related expenses, such as due diligence, correspondence, collection efforts and analysis and staff costs, increase as programs purchase more leases, and decrease as leases terminate and equipment is sold. All of these factors contribute to CCCs determination as to the amount of expenses to allocate to the Partnership or to other sponsored programs. CCC is not reimbursed for salary and benefit costs of control persons. For the Partnership, all reimbursable items are expensed as they are incurred. |
Summary of Significant Accoun21
Summary of Significant Accounting Policies: Lease Income Receivable (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Policies | |
Lease Income Receivable | Lease Income Receivable Lease income receivable includes current lease income receivable net of allowances for uncollectible amounts, if any. The Partnership monitors lease income receivable to ensure timely and accurate payment by lessees. The Partnerships Lease Relations department is responsible for monitoring lease income receivable and, as necessary, resolving outstanding invoices. The Partnership reviews a customers credit history before extending credit. When the analysis indicates that the probability of full collection is unlikely, the Partnership may establish an allowance for uncollectible lease income receivable based upon the credit risk of specific customers, historical trends and other information. The Partnership writes off its lease income receivable when it determines that it is uncollectible and all economically sensible means of recovery have been exhausted. |
Summary of Significant Accoun22
Summary of Significant Accounting Policies: Cash and Cash Equivalents (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Policies | |
Cash and Cash Equivalents | Cash and cash equivalents We consider cash and cash equivalents to be cash on hand and highly liquid investments with an original maturity of 90 days or less. At December 31, 2015, cash was held in a total of two accounts maintained at one financial institution with an aggregate balance of approximately $22,000. Bank accounts are federally insured up to $250,000 by the FDIC. At December 31, 2015 and 2014, the aggregate cash balances were as follows: Balance at December 31, 2015 2014 Total bank balance $ 22,000 $ 151,000 FDIC insured $ (22,000) $ (151,000) Uninsured amount $ - $ - The Partnership's deposits are fully insured by the FDIC. The Partnership has not experienced any losses in our accounts, and believes it is not exposed to any significant credit risk. The amounts in such accounts will fluctuate throughout 2016 due to many factors, including cash receipts, interest rates and distributions to limited partners. |
Summary of Significant Accoun23
Summary of Significant Accounting Policies: Income Taxes (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Policies | |
Income Taxes | Income Taxes Pursuant to the provisions of Section 701 of the Internal Revenue Code, the Partnership is not subject to federal income taxes. All income and losses of the Partnership are the liability of the individual partners and are allocated to the partners for inclusion in their individual tax returns. The Partnership does not have any entity-level uncertain tax positions. In addition, the Partnership believes its tax status as a pass-through entity would be sustained under U.S. Federal, state or local tax examination. The Partnership files U.S. federal and various state income tax returns and is generally subject to examination by federal, state and local income tax authorities for three years from the filing of a tax return. Taxable income differs from financial statement net income as a result of reporting certain income and expense items for tax purposes in periods other than those used for financial statement purposes, principally relating to depreciation, amortization, and lease revenue. |
Summary of Significant Accoun24
Summary of Significant Accounting Policies: Net Loss Per Equivalent Limited Partnership Unit (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Policies | |
Net Loss Per Equivalent Limited Partnership Unit | Net Income Per Equivalent Limited Partnership Unit The net income per equivalent limited partnership unit is computed based upon net income allocated to the limited partners and the weighted average number of equivalent units outstanding during the period. |
Summary of Significant Accoun25
Summary of Significant Accounting Policies: Recent Accounting Pronouncements (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Policies | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) Section A--Leases: Amendments to the FASB Accounting Standards Codification® Section B--Conforming Amendments Related to Leases: Amendments to the FASB Accounting Standards Codification® Section C--Background Information and Basis for Conclusions In January 2016, the FASB issued Accounting Standards Update No. 2016-01, Financial Instruments--Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities In August 2015, the FASB issued Accounting Standards Update No. 2015-14, R evenue from Contracts with Customers (Topic 606): Deferral of the Effective Date In June 2015, the FASB issued Accounting Standards Update No. 2015-10, Technical Corrections and Improvements- In February 2015, the FASB issued Accounting Standards Update No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis- In January 2015, the FASB issued Accounting Standards Update No. 2015-01, Income Statement--Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items . In August 2014, the FASB issued Accounting Standards Update No. 2014 -15, Disclosure of Uncertainties about an Entitys Ability to Continue as a Going Concern In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers In April 2014, the FASB issued ASU No. 2014-08 (ASU Updated 2014-08), Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity |
Summary of Significant Accoun26
Summary of Significant Accounting Policies: Disclosure of Fair Value of Financial Instruments: Fair Value Measurements, Recurring and Nonrecurring (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Tables/Schedules | |
Fair Value Measurements, Recurring and Nonrecurring | Fair Value as of December 31, 2014 Fair Value Measurements Using Fair Value Hierarchy Level 1 Level 2 Level 3 Assets Equipment $75,000 $-- $75,000 $-- |
Summary of Significant Accoun27
Summary of Significant Accounting Policies: Cash and Cash Equivalents: Schedule of Cash and Cash Equivalents (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Tables/Schedules | |
Schedule of Cash and Cash Equivalents | Balance at December 31, 2015 2014 Total bank balance $ 22,000 $ 151,000 FDIC insured $ (22,000) $ (151,000) Uninsured amount $ - $ - |
Capital Equipment_ Schedule of
Capital Equipment: Schedule of Future Minimum Rental Payments on Non-Cancelable Operating Leases (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Tables/Schedules | |
Schedule of Future Minimum Rental Payments on Non-Cancelable Operating Leases | Years Ended December 31, Amount 2016 $ 557,000 2017 105,000 2018 3,000 $ |
Capital Equipment_ Schedule o29
Capital Equipment: Schedule of Components of Direct Finance Lease Investments (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Tables/Schedules | |
Schedule of Components of Direct Finance Lease Investments | At December 31, 2015 2014 Total minimum lease payments to be received 89,000 135,000 Initial direct costs 2,000 4,000 Allowance for bad debt - - Estimated residual value of leased equipment (unguaranteed) 20,000 19,000 Less: unearned income (8,000) (17,000) Net investment in direct finance leases 103,000 141,000 |
Capital Equipment_ Schedule o30
Capital Equipment: Schedule of Finance Lease Risk Level (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Tables/Schedules | |
Schedule of Finance Lease Risk Level | Risk Level Percent of Total Low -% Moderate-Low -% Moderate -% Moderate-High 100% High -% Net finance lease receivable 100% |
Capital Equipment_ Schedule o31
Capital Equipment: Schedule of Future Minimum Lease Payments on Finance Leases (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Tables/Schedules | |
Schedule of Future Minimum Lease Payments on Finance Leases | At December 31, Amount 2016 45,000 2017 39,000 2018 5,000 $ 89,000 |
Significant Customers_ Schedule
Significant Customers: Schedule of Lessees equal to or exceeding 10% of lease revenue (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Tables/Schedules | |
Schedule of Lessees equal to or exceeding 10% of lease revenue | Years Ended December 31, 2015 2014 Cummins, Inc. 29% 22% Aetna Life Insurance 15% 17% Verso Paper 13% **% Cargill, Inc. 12% 12% Alliant Techsystems 11% 11% |
Significant Customers_ Schedu33
Significant Customers: Schedule of Lessees equal to or exceeding 10% of lease income receivable (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Tables/Schedules | |
Schedule of Lessees equal to or exceeding 10% of lease income receivable | At December 31, 2015 2014 Cummins, Inc. 51% **% Cargill, Inc 34% 26% Motorola, Inc. **% 27% Alliant Techsystems **% 11% |
Related Party Transactions_ Sch
Related Party Transactions: Schedule of Related Party Transactions (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Tables/Schedules | |
Schedule of Related Party Transactions | ENTITY RECEIVING COMPENSATION TYPE OF COMPENSATION AMOUNT INCURRED DURING 2015 AMOUNT INCURRED DURING 2014 OPERATIONAL AND SALE OR LIQUIDATION STAGES The General Partner Equipment Acquisition Fee $ 2,000 $ 34,000 The General Partner and its Affiliates Reimbursable Expenses $ 531,000 $ 628,000 The General Partner Debt Placement Fee $ - $ 9,000 The General Partner Equipment Management Fee $ 95,000 $ 155,000 The General Partner Equipment Liquidation Fee $ 4,000 $ 9,000 The General Partner Partnership Interest and Distribution $ 8,000 $ 24,000 |
Related Party Transactions_ S35
Related Party Transactions: Schedule of Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Tables/Schedules | |
Schedule of Notes Payable | At December 31, 2015 2014 Installment note payable to bank; interest rate of 4.23%, due in quarterly installments of $10,311 including interest with final payment in September 2015 $ - $ 30,000 Installment note payable to bank; interest rate of 4.23%, due in quarterly installments of $5,665, including interest, with final payment in June 2016 11,000 33,000 Installment note payable to bank; interest rate of 4.85%, due in quarterly installments of $35,894, including interest, with final payment in August 2016 105,000 240,000 Installment note payable to bank; interest rate of 4.23%, due in quarterly installments of $6,288, including interest, with final payment in December 2016 25,000 48,000 Installment note payable to bank; interest rate of 1.60%, due in monthly installments of $2,775, including interest, with final payment in March 2017 41,000 74,000 Installment note payable to bank; interest rate of 1.60%, due in monthly installments of $5,138, including interest, with final payment in April 2017 81,000 141,000 Installment note payable to bank; interest rate of 4.85%, due in quarterly installments of $7,699, including interest, with final payment in July 2017 52,000 87,000 Installment note payable to bank; interest rate of 4.23%, due in quarterly installments of $420, including interest, with final payment in August 2017 3,000 5,000 Installment note payable to bank; interest rate of 4.88%, due in monthly installments of $1,058, including interest, with final payment in October 2017 22,000 33,000 Installment notes payable to bank; interest rate of 4.23%, due in quarterly installments ranging from $1,370 to $1,927, including interest, with final payment in February 2018 28,000 - $ 368,000 $ 691,000 |
Related Party Transactions_ S36
Related Party Transactions: Schedule of future aggregate payments of notes payable (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Tables/Schedules | |
Schedule of future aggregate payments of notes payable | Years Ended December 31, Amount 2016 $ 289,000 2017 76,000 2018 3,000 $ 368,000 |
Supplemental Cash Flow Inform37
Supplemental Cash Flow Information: Schedule of non-cash investing and financing activities (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Tables/Schedules | |
Schedule of non-cash investing and financing activities | Years Ended December 31, 2015 2014 Debt assumed in connection with purchase of equipment $ 37,000 $ 475,000 Debt assumed and satisfaction of accrued expenses in 2014 in connection with acquisition of equipment in 2013 $ - $ 408,000 Accrual for distribution to partners paid in January 2015 $ - $ 209,000 |
Reconciliation of Amounts Rep38
Reconciliation of Amounts Reported For Financial Reporting Purposes To Amounts On The Federal Partnership Return (unaudited): Schedule of The tax bases of the Partnership's net assets and liabilities (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Tables/Schedules | |
Schedule of The tax bases of the Partnership's net assets and liabilities | Years Ended December 31, 2015 2014 Financial statement basis of net assets $ 1,581,334 $ 2,030,420 Tax basis of net assets (unaudited) 282,796 (189,440) Difference (unaudited) $ (1,298,538) $ (2,219,860) |
Reconciliation of Amounts Rep39
Reconciliation of Amounts Reported For Financial Reporting Purposes To Amounts On The Federal Partnership Return (unaudited): Schedule of Effective Income Tax Reconciliation (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Tables/Schedules | |
Schedule of Effective Income Tax Reconciliation | Years ended December 31, 2015 2014 Net income for financial reporting purposes to taxable loss $ 341,725 $ 68,431 Adjustments (unaudited) Gain on sale of equipment 131,282 177,058 Depreciation 805,741 727,801 Amortization 28,603 64,078 Unearned lease income (7,892) (24,159) Penalties 1,290 185 Bad debts 533 (4,435) Other (24,012) (17,320) Taxable income on the Federal Partnership return (unaudited) $ 1,277,270 $ 991,639 |
Business (Details)
Business (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Details | ||
Entity Incorporation, State Country Name | Commonwealth of Pennsylvania | |
Entity Incorporation, Date of Incorporation | Jan. 6, 2006 | |
Partners' Capital Account, Units, Redeemed | 3,468 | 565 |
Partners' Capital Account, Redemptions | $ 12,943 | $ 3,411 |
Summary of Significant Accoun41
Summary of Significant Accounting Policies: Disclosure of Fair Value of Financial Instruments: Fair Value Measurements, Recurring and Nonrecurring (Details) | Dec. 31, 2014USD ($) |
Property, Plant, and Equipment, Fair Value Disclosure | $ 75,000 |
Fair Value, Inputs, Level 2 | |
Property, Plant, and Equipment, Fair Value Disclosure | $ 75,000 |
Summary of Significant Accoun42
Summary of Significant Accounting Policies: Cash and Cash Equivalents: Schedule of Cash and Cash Equivalents (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Details | ||
Cash | $ 22,000 | $ 151,000 |
Cash, FDIC Insured Amount | $ (22,000) | $ (151,000) |
Capital Equipment (Details)
Capital Equipment (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Details | ||
Remarketing Fees Incurred | $ 6,000 | $ 6,000 |
RemarketingFeesPaid | 0 | 0 |
Asset Impairment Charges | 0 | 41,000 |
Equipment Shared | 5,111,000 | 6,006,000 |
Total Shared Equipment | 11,246,000 | 13,135,000 |
Debt Shared | 214,000 | 471,000 |
Outstanding Debt Total | $ 660,000 | $ 1,443,000 |
Capital Equipment_ Schedule o44
Capital Equipment: Schedule of Future Minimum Rental Payments on Non-Cancelable Operating Leases (Details) | Dec. 31, 2015USD ($) |
Details | |
Operating Leases, Future Minimum Payments Receivable, Current | $ 557,000 |
Operating Leases, Future Minimum Payments Receivable, in Two Years | 105,000 |
Operating Leases, Future Minimum Payments Receivable, in Three Years | 3,000 |
Operating Leases, Future Minimum Payments Receivable | $ 665,000 |
Capital Equipment_ Schedule o45
Capital Equipment: Schedule of Components of Direct Finance Lease Investments (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Details | ||
Capital Leases, Net Investment in Direct Financing Leases, Minimum Payments to be Received | $ 89,000 | $ 135,000 |
Capital Leases, Net Investment in Direct Financing Leases, Initial Direct Costs | 2,000 | 4,000 |
Capital Leases, Net Investment in Direct Financing Leases, Unguaranteed Residual Values of Leased Property | 20,000 | 19,000 |
Capital Leases, Net Investment in Direct Financing Leases, Deferred Income | (8,000) | (17,000) |
Net Investment in Finance Leases | $ 102,615 | $ 141,327 |
Capital Equipment_ Schedule o46
Capital Equipment: Schedule of Finance Lease Risk Level (Details) | Dec. 31, 2015 |
Details | |
RiskLevelModerateHigh | 100.00% |
TotalRiskLevel | 100.00% |
Capital Equipment_ Schedule o47
Capital Equipment: Schedule of Future Minimum Lease Payments on Finance Leases (Details) | Dec. 31, 2015USD ($) |
Details | |
Capital Leases, Future Minimum Payments Receivable, Next Twelve Months | $ 45,000 |
Capital Leases, Future Minimum Payments, Receivable in Two Years | 39,000 |
Capital Leases, Future Minimum Payments, Receivable in Three Years | 5,000 |
Capital Leases, Future Minimum Payments Receivable | $ 89,000 |
Significant Customers_ Schedu48
Significant Customers: Schedule of Lessees equal to or exceeding 10% of lease revenue (Details) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Cummins, Inc. | ||
Percent Lease Revenue | 29.00% | 22.00% |
Aetna Life Insurance | ||
Percent Lease Revenue | 15.00% | 17.00% |
Verso Paper | ||
Percent Lease Revenue | 13.00% | 0.00% |
Cargill, Inc. | ||
Percent Lease Revenue | 12.00% | 12.00% |
Alliant Techsystems | ||
Percent Lease Revenue | 11.00% | 11.00% |
Significant Customers_ Schedu49
Significant Customers: Schedule of Lessees equal to or exceeding 10% of lease income receivable (Details) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Cummins, Inc. | ||
Percent Lease Income Receivable | 51.00% | 0.00% |
Cargill, Inc. | ||
Percent Lease Income Receivable | 34.00% | 26.00% |
Motorola, Inc. | ||
Percent Lease Income Receivable | 0.00% | 27.00% |
Alliant Techsystems | ||
Percent Lease Income Receivable | 0.00% | 11.00% |
Related Party Transactions_ S50
Related Party Transactions: Schedule of Related Party Transactions (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Details | ||
Equipment acquisition fees earned from operating leases | $ 2,000 | $ 31,000 |
Equipment acquisition fees earned from finance leases | 0 | 3,000 |
Equipment Acquisition Fees | 2,000 | 34,000 |
Other LP Expense | 254,000 | 305,000 |
Reimbursable Expenses | 531,000 | 628,000 |
Debt placement fees | 9,000 | |
Equipment Management Fee | 95,000 | 155,000 |
Equipment liquidation fees waived | 11,000 | 0 |
Equipment liquidation fee | 4,000 | 9,000 |
Partnership Interest and Distribution | $ 8,000 | $ 24,000 |
Related Party Transactions_ S51
Related Party Transactions: Schedule of Notes Payable (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Long-term Debt, Gross | $ 368,000 | $ 691,000 |
Note 1 | ||
Debt Instrument, Description | Installment note payable to bank | |
Debt Instrument, Interest Rate, Stated Percentage | 4.23% | |
Debt Instrument, Payment Terms | due in quarterly installments of $10,311 including interest | |
Debt Instrument, Maturity Date, Description | final payment in September 2015 | |
Long-term Debt, Gross | 30,000 | |
Note 2 | ||
Debt Instrument, Description | Installment note payable to bank | |
Debt Instrument, Interest Rate, Stated Percentage | 4.23% | |
Debt Instrument, Payment Terms | due in quarterly installments of $5,665, including interest | |
Debt Instrument, Maturity Date, Description | final payment in June 2016 | |
Long-term Debt, Gross | $ 11,000 | 33,000 |
Note 3 | ||
Debt Instrument, Description | Installment note payable to bank | |
Debt Instrument, Interest Rate, Stated Percentage | 4.85% | |
Debt Instrument, Payment Terms | due in quarterly installments of $35,894, including interest | |
Debt Instrument, Maturity Date, Description | final payment in August 2016 | |
Long-term Debt, Gross | $ 105,000 | 240,000 |
Note 4 | ||
Debt Instrument, Description | Installment note payable to bank | |
Debt Instrument, Interest Rate, Stated Percentage | 4.23% | |
Debt Instrument, Payment Terms | due in quarterly installments of $6,288, including interest | |
Long-term Debt, Gross | $ 25,000 | 48,000 |
Note 5 | ||
Debt Instrument, Description | Installment note payable to bank | |
Debt Instrument, Interest Rate, Stated Percentage | 1.60% | |
Debt Instrument, Payment Terms | due in monthly installments of $2,775, including interest | |
Debt Instrument, Maturity Date, Description | final payment in March 2017 | |
Long-term Debt, Gross | $ 41,000 | 74,000 |
Note 6 | ||
Debt Instrument, Description | Installment note payable to bank | |
Debt Instrument, Interest Rate, Stated Percentage | 1.60% | |
Debt Instrument, Payment Terms | due in monthly installments of $5,138, including interest | |
Long-term Debt, Gross | $ 81,000 | 141,000 |
Note 7 | ||
Debt Instrument, Description | Installment note payable to bank | |
Debt Instrument, Interest Rate, Stated Percentage | 4.85% | |
Debt Instrument, Payment Terms | due in quarterly installments of $7,699, including interest | |
Long-term Debt, Gross | $ 52,000 | 87,000 |
Note 8 | ||
Debt Instrument, Description | Installment note payable to bank | |
Debt Instrument, Interest Rate, Stated Percentage | 4.23% | |
Debt Instrument, Payment Terms | due in quarterly installments of $420, including interest | |
Debt Instrument, Maturity Date, Description | final payment in August 2017 | |
Long-term Debt, Gross | $ 3,000 | 5,000 |
Note 9 | ||
Debt Instrument, Description | Installment note payable to bank | |
Debt Instrument, Interest Rate, Stated Percentage | 4.88% | |
Debt Instrument, Payment Terms | due in monthly installments of $1,058, including interest | |
Long-term Debt, Gross | $ 22,000 | $ 33,000 |
Note 10 | ||
Debt Instrument, Description | Installment notes payable to bank | |
Debt Instrument, Interest Rate, Stated Percentage | 4.23% | |
Debt Instrument, Payment Terms | due in quarterly installments ranging from $1,370 to $1,927, including interest | |
Debt Instrument, Maturity Date, Description | final payment in February 2018 | |
Long-term Debt, Gross | $ 28,000 |
Related Party Transactions_ S52
Related Party Transactions: Schedule of future aggregate payments of notes payable (Details) | Dec. 31, 2015USD ($) |
Details | |
Long-term Debt, Maturities, Repayments of Principal in Next Twelve Months | $ 289,000 |
Long-term Debt, Maturities, Repayments of Principal in Year Two | 76,000 |
Long-term Debt, Maturities, Repayments of Principal in Year Three | 3,000 |
Long-term Debt | $ 368,000 |
Supplemental Cash Flow Inform53
Supplemental Cash Flow Information: Schedule of non-cash investing and financing activities (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Details | ||
Debt assumed in connection with purchase of computer equipment | $ 37,000 | $ 475,000 |
Debt assumed and satisfaction of accrued expenses in connection with acquisition of equipment | 408,000 | |
Accrual for distribution to partners | $ 209,000 |
Supplemental Cash Flow Inform54
Supplemental Cash Flow Information (Details) | 12 Months Ended | |
Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Details | ||
Fully Amortized Fees Written Off | 112,000 | 144,000 |
Allowance for Doubtful Accounts Receivable, Write-offs | $ 4,000 | $ 5,000 |
Fully Depreciated Equipment Wrote-Off | 0 | 403,000 |
Asset Impairment Charges | $ 0 | $ 41,000 |
Reconciliation of Amounts Rep55
Reconciliation of Amounts Reported For Financial Reporting Purposes To Amounts On The Federal Partnership Return (unaudited): Schedule of The tax bases of the Partnership's net assets and liabilities (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Details | ||
Net assets, financial statement basis | $ 1,581,334 | $ 2,030,420 |
Net assets, tax basis | 282,796 | (189,440) |
Net assets, difference between financial statement basis and tax basis | $ (1,298,538) | $ (2,219,860) |
Reconciliation of Amounts Rep56
Reconciliation of Amounts Reported For Financial Reporting Purposes To Amounts On The Federal Partnership Return (unaudited): Schedule of Effective Income Tax Reconciliation (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | ||
Details | |||
Net loss for financial reporting purposes to taxable loss | $ 341,725 | $ 68,431 | |
Adjustments to net income for financial reporting purposes to taxable loss | |||
Gain (loss) on sale of equipment, basis reconciliation | 131,282 | 177,058 | |
Depreciation, basis reconciliation | 805,741 | 727,801 | |
Amortization | 28,603 | 64,078 | |
Unearned Lease Income, basis reconciliation | (7,892) | (24,159) | |
Penalties | 1,290 | 185 | |
Allowance for Loan and Lease Loss, Recovery of Bad Debts | 533 | (4,435) | |
Other Reconciliation differences | [1] | (24,012) | (17,320) |
Taxable income (loss) on the Federal Partnership return (unaudited) | $ 1,277,270 | $ 991,639 | |
[1] | The Adjustments Other includes financial statement adjustments that will be reflected on the tax return in the subsequent year. |