City Taxi Service purchased a new auto to use as a taxi on January $1,$ Year $1,$ for $$20,700.$ In addition, City paid sales tax and title fees of

$$1,290$ for the vehicle. The taxi is expected to have a five$-$year life and a salvage value of $$5,760.$

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 $$17,823.$ Determine the amount of gain or loss that would be recognized on the

asset disposal. $($Round the intermediate calculations to nearest whole dollar amount.$)$