Technoid leases computers to a lessee on January 1, 2021. The manufacturing cost of the computers was $12 million. This noncancelable lease had the following terms:

• Lease payments: $2,466,754 semiannually; first payment at January 1, 2021; remaining payments at June 30 and December 31 each year through June 30, 2025.
• Lease term: five years (10 semiannual payments).
• No residual value; no purchase option.
• Economic life of equipment: five years.
• Implicit interest rate and lessee's incremental borrowing rate: 5% semiannually.
• Fair value of the computers at January 1, 2021: $20 million.

The lessee would account for this as:

Multiple Choice

• A finance lease.

• A sales type lease without selling profit.

• A sales type lease with selling profit.

• An operating lease