BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2012

2.	BASIS OF PRESENTATION

The accompanying condensed financial statements are unaudited and have been prepared pursuant to the rules of the United States Securities and Exchange Commission (the "SEC") and, in the opinion of management, include all adjustments that are necessary for a fair presentation of the condensed financial statements for the periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted pursuant to SEC rules. These condensed financial statements should be read in conjunction with the Trust's Annual Report on Form 10-K for the year ended December 31, 2011, filed with the SEC on February 29, 2012 (the "2011 Form 10-K"). No significant changes have been made to the Trust's accounting policies and estimates disclosed in its 2011 Form 10-K.

Upon the effectiveness of the Trust's Plan of Dissolution, the Trust adopted the liquidation basis of accounting. This basis of accounting is considered appropriate when, among other things, liquidation of the Trust is probable. Under this basis of accounting, assets are valued at their estimated net realizable values and liabilities are valued at their estimated settlement amounts. The valuation of assets and liabilities requires management to make significant estimates and assumptions. On an on-going basis, the Trust evaluates the estimates and assumptions that can have a significant impact on the Trust's reported net assets in liquidation. Actual amounts may differ materially and adversely from these estimates. If there are delays in liquidating the Trust, actual costs incurred during the liquidation process would likely increase, reducing net assets available in liquidation and for future distributions to shareholders.

For the three and six months ended June 30, 2012, the Trust increased its estimated liquidation accruals by $113 and $188, respectively, primarily to cover estimated increases in expenses associated with resolving the matters discussed in Note 4.

RIDGEWOOD ELECTRIC POWER TRUST III 10-Q