On 1 January 20X2, Rental Inc. purchased an apartment building. Apartments in this area are in high demand, and a wait list exists for potential tenants. The following costs were incurred for the purchase: cash $8,000,000; legal fees $1,200,000; and repairs and renovations $135,000. The fire code also required the installation of a new sprinkler system for $120,000. On 31 December 20X3, the fair value of the apartment building was estimated to be $10 million, and in 20X4, $11.5 million. In 20X5, a decision was made to add a new wing that allowed additional apartment units. The cost of this expansion was $5,000,000. On 31 December 20X5 the fair value of the apartment building was estimated to be $18 million. The building has a security system, and an apartment manager provides routine maintenance.

Required:

1. What are the options available for recording the land and apartment buildings?

2. Assuming the fair value model is selected, provide the journal entries for 20X2, 20X3, 20X4, and 20X5.