(Accounting for a basket purchase, LO 2) In January 2005 Bath Inc. (Bath) purchased a small office building on a half-hectare piece of land in downtown Saskatoon for $9,000,000. An appraiser valued the land at $3,500,000. The building is eight years old and Bath’s management expects the building to last for another 16 years, after which time it will have to be demolished. Management has decided to use straight-line amortization.

Required:

Prepare the journal entries that Bath would make to record the purchase of the land and building. What entry would be made to record the amortization expense for the year ended December 31, 2005?