3.

Exercise 6-11A (Algo) Events related to the acquisition, use, and disposal of a tangible plant asset: Straight-line depreciation LO 6-2, 6-5 City Taxi Service purchased a new auto to use as a taxi on January 1, Year 1, for $28,000. In addition, City paid sales tax and titie fees of $1,160 for the vehicle. The taxi is expected to have a five-year life and a salvage value of $5,060. Required a. Using the straight-line method, compute the depreciation expense for Year 1 and Year 2 . (Round your answers to the nearest whole dollar amount) b. Assume the auto was sold on January 1 , Year 3 , for $22,448. Determine the amount of gain or loss that wouid be recognized on the asset disposal, (Round the intermediate calculations to nearest whole dollar amount.)