Boeing builds a plane for $10 million that it normally sells for $15 million. However, on January 1, Year One, Boeing leases this plane to Delta for $3 million per year for 7 years (the entire expected life of the plane). Which of the following answers is correct?

Boeing builds a plane for $10 million that it normally sells for $15 million. However, on January 1, Year One, Boeing leases this plane to Delta for $3 million per year for 7 years (the entire expected life of the plane). Which of the following answers is correct?
To Boeing, this lease qualifies as a direct financing lease.
To Delta, this lease qualifies as a sales type lease.
Boeing will recognize a $5 million profit when the lease is signed.
Delta recognizes rent expense of $3 million in Year One.

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