SecProbe.io

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VIA EDGAR AND OVERNIGHT COURIER

June 30, 2005

Nili Shah
Branch Chief
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC  20549-0510
Mail Stop 0510

         Re:      AeroCentury Corp.
                  Form 10-KSB for fiscal year ended 12/31/2004 filed 3/11/2005
                  Form 10-QSB for quarter ended 3/31/2005
                  filed 5/12/2005
                  File No.  1-13387

Dear Branch Chief Shah:

This letter is in response to your letter to me dated June 2, 2005,  relating to
the  above-referenced SEC filings. Our response tracks the order of the comments
in your  letter.  A hard copy of a  redlined  amended  Form  10-KSB for the 2004
fiscal year  containing  the  updated  disclosures  described  in this letter is
attached  for your  review,  with  numerical  annotations  corresponding  to the
comment letter paragraph number.  Upon final clearance of our response,  we will
file an amended Form 10-KSB for the 2004 fiscal year with the SEC through EDGAR.
At the same time, we will also file an amended Form 10-QSB for the first quarter
of 2005 with the same changes as those made to the Form  10-KSB,  as well as the
change necessitated by your Comment 9.

For your convenience, we have incorporated,  in upper case [bold-typeface in the
hard copy of the letter], your comments and our proposed responses into the body
of our letter.

FORM 10-KSB FOR THE YEAR ENDED 12/31/2004

CRITICAL ACCOUNTING POLICIES

1.   IT APPEARS THAT YOUR DISCLOSURE IN THIS SECTION REPLICATES YOUR STATED
     ACCOUNTING POLICIES INCLUDED WITHIN NOTE 1 TO YOUR CONSOLIDATED FINANCIAL
     STATEMENTS. PLEASE REVISE YOUR CRITICAL ACCOUNTING POLICIES TO PROVIDE A
     DISCUSSION OF THE UNCERTAINTIES INVOLVED AT A GIVEN TIME IN ARRIVING AT
     CRITICAL ESTIMATES OR THE VARIABILITY THAT IS REASONABLY LIKELY TO RESULT
     FROM THE APPLICATION OVER TIME. SPECIFICALLY, ADDRESS

     O    THE  TYPES  OF  ASSUMPTIONS   UNDERLYING  THE  MOST   SIGNIFICANT  AND
          SUBJECTIVE ESTIMATES;

     O    SENSITIVITY  OF THOSE  ESTIMATES TO DEVIATIONS OF ACTUAL  RESULTS FROM
          MANAGEMENT'S  ASSUMPTIONS;  AND

     O    CIRCUMSTANCES THAT HAVE RESULTED IN REVISED ASSUMPTIONS IN THE PAST.

REFER TO FINANCIAL REPORTING POLICY 60 AND RULE 33-8098 FOR GUIDANCE.

Company Response: We have revised our disclosure of critical accounting policies
and use of estimates to more clearly explain the types of assumptions underlying
our most  significant  and  subjective  estimates,  to  describe  in more detail
sensitivity of those  estimates to deviations  from actual results and to relate
past circumstances  where we have had to revise assumptions,  as requested.  The
following is our proposed  revised  disclosure for the  Management  Discussion &
Analysis,  followed by our proposed  revised  disclosure  for Notes 1(c),  1(f),
1(g), 1(h), and 1(i) to the consolidated financial statements:

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          MANAGEMENT DISCUSSION & ANALYSIS

          Critical Accounting Policies, Judgments and Estimates

          The discussion and analysis of the Company's  financial  condition and
          results  of  operations  are  based  upon the  consolidated financial
          statements,  which have been  prepared in accordance  with  accounting
          principles  generally  accepted in the United  States of America.  The
          preparation of these financial  statements requires management to make
          estimates and judgments that affect the reported amounts of assets and
          liabilities,  revenues and  expenses,  and the related  disclosure  of
          contingent  assets  and  liabilities  at the  date  of  the  financial
          statements.  Actual  results  may differ  from these  estimates  under
          different assumptions or conditions.

          The Company's significant  accounting policies are described in Note 1
          to the consolidated financial statements. We believe our most critical
          accounting  policies  include the following:  Impairment of Long-lived
          Assets;  Depreciation Policy,  Maintenance Reserves and Accrued Costs;
          Revenue   Recognition  and  Allowance  for  Doubtful   Accounts;   and
          Accounting for Income Taxes.

          a. Impairment of Long-lived Assets

          The  Company   periodically   reviews  its  portfolio  of  assets  for
          impairment  in  accordance  with  Statement  of  Financial  Accounting
          Standards ("SFAS") No. 144, "Accounting for the Impairment or Disposal
          of Long-lived Assets." Such review  necessitates  estimates of current
          market values,  re-lease rents,  residual values and component values.
          The  estimates  are  based  on  currently  available  market  data and
          third-party  appraisals  and are subject to  fluctuation  from time to
          time. The Company initiates its review  periodically,  whenever events
          or changes in  circumstances  indicate  that the carrying  amount of a
          long-lived asset may not be recoverable. Recoverability of an asset is
          measured by comparison of its carrying  amount to the expected  future
          undiscounted  cash flows (without  interest charges) that the asset is
          expected to generate.  Any  impairment to be recognized is measured by
          the amount by which the carrying  amount of the asset exceeds its fair
          market  value.  Significant  management  judgment  is  required in the
          forecasting  of  future  operating  results  which  are  used  in  the
          preparation of projected  undiscounted cash flows and should different
          conditions prevail, material write downs may occur.

          In accordance  with its periodic review of its portfolio of assets for
          impairment,  during the third quarter of 2004, the Company  recorded a
          provision  for  impairment  of  approximately  $463,000 for one of its
          aircraft,  based on the  Company's  cash flow analysis and third party
          appraisals  which  reflected a decline in market  conditions  for this
          type of  aircraft  during  the year.  In  addition,  during the fourth
          quarter  of  2004,  the  Company  recorded  an  impairment  charge  of
          approximately  $193,000 for another  aircraft,  based on the estimated
          net sales  proceeds  pursuant to an  agreement to sell the aircraft in
          early 2005.

          b. Depreciation Policy

          The Company's  interests in aircraft and aircraft engines are recorded
          at cost, which includes  acquisition costs. The Company purchases only
          used  aircraft.  It is the  Company's  policy  to  hold  aircraft  for
          approximately  twelve  years.   Depreciation  is  computed  using  the
          straight-line  method  over the  twelve  year  period to an  estimated
          residual  value based on  appraisal.  Decreases in the market value of
          aircraft could not only affect the current value, discussed above, but
          could also affect the assumed residual value. The Company periodically
          obtains a residual value  appraisal for its assets and,  historically,
          has not written down any estimated residuals.

          c. Maintenance Reserves and Accrued Costs

          Maintenance  costs under the Company's triple net leases are generally
          the  responsibility of the lessees.  Maintenance  reserves and accrued
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          costs  in  the   accompanying   consolidated   balance  sheet  include
          refundable  and  non-refundable  maintenance  payments  received  from
          lessees.  The Company  periodically  reviews maintenance  reserves for
          each of its  aircraft  for  adequacy  in light of the  number of hours
          flown,   airworthiness   directives  issued  by  the  manufacturer  or
          government  authority,  and the  return  conditions  specified  in the
          lease,  as  well as the  condition  of the  aircraft  upon  return  or
          inspection.  As a result of such  review,  if it is probable  that the
          Company  has  incurred  costs for  maintenance  in  excess of  amounts
          received from lessees, the Company accrues its share of costs for work
          to be performed.

          Significant  management  judgment is required in determining  aircraft
          condition  and  estimating   maintenance  costs.  Absent  fixed  price
          maintenance  agreements,  these costs cannot be determined  until such
          work is completed.  Because of the potential  magnitude of maintenance
          costs, even slight changes in work scope may have a material impact on
          operating results.

          With respect to estimated maintenance costs, the Company has found its
          accruals  to be  generally  accurate.  Nevertheless,  the  Company has
          incurred  significant  maintenance expense in connection with aircraft
          which were  returned  early  during the last two years in a  condition
          worse than required by the lease.  Specifically,  the Company incurred
          maintenance  expense  of  approximately  $442,000  and  $1,864,000  in
          connection  with the  early  return  of  aircraft  in 2004  and  2003,
          respectively.

          d. Revenue Recognition and Allowance for Doubtful Accounts

          Revenue from  leasing of aircraft  assets is  recognized  as operating
          lease  revenue  on  a  straight-line  basis  over  the  terms  of  the
          applicable  lease  agreements.  The Company  estimates  and charges to
          income  a  provision  for bad  debts  based on its  experience  in the
          business  and  with  each  specific  customer,  the  level of past due
          accounts,   and  its  analysis  of  the  lessee's  overall   financial
          condition.  If the  financial  condition  of the  Company's  customers
          deteriorates, it could result in actual losses exceeding the estimated
          allowances.

          During  2003,  in  connection  with a lessee's  default,  the  Company
          recorded  an  increase  to the  allowance  for  doubtful  accounts  of
          $480,000.  Based  on  payment  histories,  including  this  particular
          lessee's,  the  Company  reversed  a portion of the  allowance  twelve
          months  later.  However,   based  on  subsequent  experience  and  the
          Company's revised  evaluation of the lessee's intention to make future
          payments,  the Company  increased  the  allowance  back to $480,000 at
          December 31, 2004.

          e. Accounting for Income Taxes

          As  part  of the  process  of  preparing  the  Company's  consolidated
          financial statements,  management is required to estimate income taxes
          in each of the  jurisdictions  in which  the  Company  operates.  This
          process involves  estimating the Company's  current tax exposure under
          the most recent tax laws and assessing temporary differences resulting
          from  differing  treatment of items for tax and  accounting  purposes.
          These differences result in deferred tax assets and liabilities, which
          are included in our consolidated balance sheet.  Management must also
          assess the likelihood  that the Company's  deferred tax assets will be
          recovered from future taxable  income,  and, to the extent  management
          believes it is more  likely  than not that some  portion or all of the
          deferred tax assets will not be realized, the Company must establish a
          valuation allowance. To the extent the Company establishes a valuation
          allowance  or changes the  allowance  in a period,  the  Company  must
          reflect  the  corresponding   increase  or  decrease  within  the  tax
          provision in the consolidated statement of operations.

          Significant   management  judgment  is  required  in  determining  the
          Company's   future  taxable  income  for  purposes  of  assessing  the
          Company's  ability to realize any benefit from its deferred  taxes. In
          the event that  actual  results  differ  from these  estimates  or the
          Company  adjusts  these  estimates in future  periods,  the  Company's
          operating results and financial position could be materially affected.

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          NOTE 1

          (c) Aircraft and Aircraft Engines Held For Lease and Held for Sale

          The Company's  interests in aircraft and aircraft engines are recorded
          at cost, which includes  acquisition costs. The Company purchases only
          used  aircraft.  It is the  Company's  policy  to  hold  aircraft  for
          approximately  twelve  years.   Depreciation  is  computed  using  the
          straight-line  method  over the  twelve  year  periodto  an  estimated
          residual  value based on  appraisal.  Decreases in the market value of
          aircraft  could not only  affect  the  current  value,  but could also
          affect the assumed residual value. The Company  periodically obtains a
          residual  value  appraisal for its assets and,  historically,  has not
          written  down any  estimated  residuals.  The  Company's  aircraft and
          aircraft   engines  which  are  held  for  sale  are  not  subject  to
          depreciation.

          (f) Maintenance Reserves and Accrued Costs and Security Deposits

          Maintenance  costs under the Company's triple net leases are generally
          the  responsibility  of the  lessees.  The  accompanying  consolidated
          balance  sheet  reflects  liabilities  for  maintenance  reserves  and
          accrued costs, which include refundable and non-refundable maintenance
          payments received from lessees,  as well as security deposits received
          from  lessees.   At  December  31,  2004,   the  Company  had  accrued
          liabilities   for   refundable   maintenance   reserves  of  $445,800,
          non-refundable   maintenance   reserves  of  $8,817,580  and  security
          deposits of $1,775,290.

          Maintenance  reserves which are refundable to the lessee at the end of
          the lease may be retained by the Company if such amounts are necessary
          to meet the return  conditions  specified  in the lease  and,  in some
          cases, to satisfy any other payments due under the lease.

          Non-refundable  maintenance  reserves  received  by  the  Company  are
          accounted for as a liability which is reduced when maintenance work is
          performed.  When  an  aircraft  is  sold,  any  excess  non-refundable
          maintenance  reserves  are  recorded as income.  During the year ended
          December 31, 2004, $190,500 of excess reserves was recorded as income.

          The Company  periodically reviews maintenance reserves for adequacy in
          light of the number of hours flown, airworthiness directives issued by
          the manufacturer or government  authority,  and the return  conditions
          specified in the lease,  as well as the condition of the aircraft upon
          return or inspection.  As a result of such review, when it is probable
          that the  Company  has  incurred  costs for  maintenance  in excess of
          amounts received from lessees,  the Company accrues its share of costs
          for work to be  performed.  Such  costs  include  maintenance  such as
          engine and propeller  overhauls,  structural  inspections  and work to
          comply with airworthiness directives.

          At December 31, 2004, the Company had accrued  maintenance  costs,  in
          excess o