Montana Inc. sells computer systems. Montana leases computers to Utah Company on June 30, 2017. The computers cost Montana $12 million to manufacture. The lease is non-cancelable and has the following terms: Lease payments: $2,466,754 semiannually; first payment due June 30, 2017; remaining payments due December 31 and June 30 each year through December 31, 2021. Lease term: 5 years (10 semi-annual payments). No residual value; no bargain purchase option. Economic life of equipment: 5 years. Implicit interest rate and lessee's incremental borrowing rate: 10% per year. Fair value of the computers at June 30, 2017: $20 million. Collectability of the rental payments is reasonably assured, and there are no lessor costs yet to be incurred.

Q1) Montana would account for this lease as: A) A finance lease. B) A sales type lease without selling profit. C) A sales type lease with selling profit. D) An operating lease.

Q2) Utah Company would account for this lease as: A) A finance lease. B) A sales type lease without selling profit. C) A sales type lease with selling profit. D) An operating lease.