Montana Inc. sells computer systems. Montana leases computers to Utah Company on June 30, 2021. 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, 2021; remaining payments due December 31 and June 30 each year through December 31, 2025.

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, 2021: $20 million. Collectability of the rental payments is reasonably assured, and there are no lessor costs yet to be incurred.