Summary of Significant Accounting Policies (Policy) | 12 Months Ended |
Dec. 31, 2013 |
Summary of Significant Accounting Policies [Abstract] | ' |
Basis of Presentation | ' |
Basis of presentation: |
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The accompanying balance sheets as of December 31, 2013 and 2012, and the related statements of income, changes in partners’ capital, and cash flows for the years then ended, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission. |
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Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications had no significant effect on the reported financial position or results from operations. |
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Footnote and tabular amounts are presented in thousands, except as to Units and per Unit data. |
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In preparing the accompanying financial statements, the Partnership/Trust has reviewed, as determined necessary by the General Partner/Trustee, events that have occurred after December 31, 2013, up until the issuance of the financial statements. No events were noted which would require disclosure in the footnotes to the financial statements. |
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Use of Estimates | ' |
Use of estimates: |
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The preparation of financial statements in conformity with GAAP 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 primarily relate to the determination of residual values at the end of the lease term and expected future cash flows used for impairment analysis purposes and determination of the allowance for doubtful accounts. |
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Cash and Cash Equivalents | ' |
Cash and cash equivalents: |
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Cash and cash equivalents includes cash in banks and cash equivalent investments such as U.S. Treasury instruments with original and/or purchased maturities of ninety days or less. |
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Credit Risk | ' |
Credit risk: |
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Financial instruments that potentially subjected the Partnership to concentrations of credit risk include cash and cash equivalents, operating lease receivables and accounts receivable. The Partnership placed the majority of its cash deposits in noninterest-bearing accounts with financial institutions that have no less than $10 billion in assets. Such deposits were insured up to $250 thousand. The remainder of the Funds’ cash was temporarily invested in U.S. Treasury denominated instruments. The concentration of such deposits and temporary cash investments was not deemed to create a significant risk to the Partnership. Accounts receivable represented amounts due from lessees in various industries, related to equipment on operating leases. |
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Accounts Receivable | ' |
Accounts receivable: |
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Accounts receivable represented the amounts billed under operating lease contracts which were currently due to the Partnership. Allowances for doubtful accounts were typically established based on historical charge-off and collection experience and the collectability of specifically identified lessees and invoiced amounts. Accounts receivable deemed uncollectible were charged-off on a specific identification basis by AFS. Amounts recovered that were previously written-off were recorded as other income in the period received. |
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Equipment on Operating Leases and Related Revenue Recognition | ' |
Equipment on operating leases and related revenue recognition: |
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Equipment subject to operating leases was stated at cost. Depreciation was recognized on a straight-line method over the terms of the related leases to the equipment’s estimated residual values. Off-lease equipment was generally not subject to depreciation. Maintenance costs associated with the Fund’s portfolio of leased assets were expensed as incurred. Major additions and betterments were capitalized. |
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Operating lease revenue was recognized on a straight-line basis over the term of the underlying leases. The initial lease terms varied as to the type of equipment subject to the leases, the needs of the lessees and the terms negotiated, but initial leases were generally from 36 to 120 months. The difference between rent received and rental revenue recognized was recorded as unearned operating lease income on the balance sheet. |
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Operating leases were generally placed in a non-accrual status (i.e., no revenue was recognized) when payments were more than 90 days past due. Additionally, management considered the equipment underlying the lease contracts for impairment and periodically reviewed the credit worthiness of all operating lessees with payments outstanding less than 90 days. Based upon management’s judgment, the related operating leases were subject to being placed on non-accrual status. Leases placed on non-accrual status were only returned to an accrual status when the account was brought current and management believed recovery of the remaining unpaid lease payments was probable. Until such time, revenues were recognized on a cash basis. |
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The Partnership earned revenues from certain lease assets based on utilization of such assets. Such contingent rentals and the associated expenses were recorded when earned and/or incurred. |
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Asset Valuation | ' |
Asset valuation: |
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Recorded values of the Partnership’s asset portfolio were periodically reviewed for impairment. An impairment loss was measured and recognized only if the estimated undiscounted future cash flows of the asset were less than their net book value. The estimated undiscounted future cash flows were the sum of the estimated residual value of the asset at the end of the asset’s expected holding period and estimates of undiscounted future rents. The residual value assumed, among other things, that the asset was utilized normally in an open, unrestricted and stable market. Short-term fluctuations in the market place were disregarded and it was assumed that there was 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 was 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 assets and its carrying value on the measurement date. |
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Segment Reporting | ' |
Segment reporting: |
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The Partnership was not organized by multiple operating segments for the purpose of making operating decisions or assessing performance. Accordingly, the Partnership operated in one reportable operating segment in the United States. |
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The Partnership’s principal decision makers were the General Partner’s Chief Executive Officer and its Chief Financial Officer and Chief Operating Officer. The Partnership believed that its equipment leasing business operated as one reportable segment because: a) the Partnership measured profit and loss at the equipment portfolio level as a whole; b) the principal decision makers did not review information based on any operating segment other than the equipment leasing transaction portfolio; c) the Partnership did not maintain discrete financial information on any specific segment other than its equipment financing operations; d) the Partnership did not choose to organize its business around different products and services other than equipment lease financing; and e) the Partnership did not choose to organize its business around geographic areas. |
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However, certain of the Partnership’s lessee customers may have had international operations. In these instances, the Partnership was aware that certain equipment, primarily rail and transportation, may periodically exit the country. However, these lessee customers are US-based, and it was impractical for the Partnership to track, on an asset-by-asset, day-by-day basis, where these assets were deployed. |
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The primary geographic regions in which the Partnership sought leasing opportunities were North America and Europe. During the years ended December 31, 2013 and 2012, 100% of the Partnership’s operating revenues were from customers domiciled in North America. |
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Unearned Operating Lease Income | ' |
Unearned operating lease income: |
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The Partnership recorded prepayments on operating leases as a liability under the caption of unearned operating lease income. The liability was recorded when prepayments were received and recognized as operating lease revenue over the period to which the prepayments related using a straight-line method. |
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Income Taxes | ' |
Income taxes: |
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Pursuant to the provisions of Section 701 of the Internal Revenue Code, a 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. Accordingly, the Partnership has provided current income and franchise taxes for only those states which levy taxes on partnerships. Interest and penalties on such taxes are considered to be insignificant. The net tax expense recorded for the years ended December 31, 2013 and 2012 was $2 thousand and $1 thousand, respectively. The Partnership does not have any entity level uncertain tax positions. The Partnership files income tax returns in the U.S. federal jurisdiction and various state jurisdictions and is generally subject to examination by U.S. federal (or state and local) income tax authorities for three years from the filing of a tax return. |
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The tax bases of the Partnership’s net assets and liabilities vary from the amounts presented in these financial statements as of December 31, 2013, when net assets were transferred to the Trust, and 2012 as follows (in thousands): |
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| | 2013 | | | 2012 |
Financial statement basis of net assets | $ | - | | $ | 3,994 |
Tax basis of net assets (unaudited) | | - | | | 13,931 |
Difference (unaudited) | $ | - | | $ | -9,937 |
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The primary differences between the tax bases of net assets and the amounts recorded in the financial statements were the result of differences in accounting for syndication costs and differences between the depreciation methods used in the financial statements and the Partnership’s tax returns. |
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The following reconciles the net income reported in these financial statements to the income reported on the Partnership’s federal tax return (unaudited) for each of the years ended December 31, 2013 and 2012 (in thousands): |
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| | 2013 | | | 2012 |
Net income per financial statements | $ | 799 | | $ | 1,157 |
Tax adjustments (unaudited): | | | | | |
Adjustment to depreciation expense | | 211 | | | 321 |
Provision for doubtful accounts | | -1 | | | 1 |
Adjustments to gain on sales of assets | | 4,743 | | | 95 |
Adjustments to revenues and other items | | 4 | | | -4 |
Income per federal tax return (unaudited) | $ | 5,756 | | $ | 1,570 |
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Per Unit Data | ' |
Per unit data: |
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Net income and distributions per unit are based upon the weighted average number of units outstanding during the year. |
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Recent Accounting Pronouncements | ' |
Recent accounting pronouncements: |
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Recent accounting standards updates as issued by the Financial Accounting Standards Board (FASB) were evaluated and determined to be not applicable to the Partnership. |
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