1. The business continued to grow at the anticipated pace in 203. 2. In June 20X4, a rumor was circulated that a hazardous waste deposit existed on the company's property, but no evidence was presented to support the allegation. In November 20X4, an investigative team from local, state, and federal health services arrived on the scene to conduct a detailed investigation of the property. In the third week of December, they reported having found what, had once been a dump site. The investigators took many samples and sent these to laboratories, then left, stating they would return in the second week of January. They hope to have tentative laboratory reports at the time of their return. The company's attorneys are concerned about the investigation because the company's insurance does not cover losses from this problem and the state law places responsibility on the current owner to clean up the property. Because of the rumors, customers were reluctant to come to the building and business declined dramatically in November and December 20X4. 3. In late December 20X4, the company's executive manager suggested that because of the decline in business the company should reduce its current depreciation charge, resulting in lower depreciation in the next few years, with greater depreciation in subsequent years. The manager thinks his plan is akin to units-of-production depreciation and he expects future business to be greater, resulting in higher depreciation at that time. Required: 1. Prepare the adjusting entries on December 31, 202, to record depreciation expense for the year on all assets. 2-a. Compute the amount of MACRS cost recovery for tax purposes on the furniture and fixtures in (1) 202 and (2) 203. (Use MACRS Table). 2-b. What is the MACRS recovery perlod for the bullding? 4. Do you agree with the company's financial manager that depreciation should be reduced in 204 because of the decline in business