City Taxi Service purchased a new auto to use as a taxi on January 1, Year 1, for $21,900. In addition, City paid sales tax and title fees of $840 for the vehicle. The taxi is expected to have a five-year life and a salvage value of $6,710. 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 $18,777. Determine the amount of gain or loss that would be recognized on the asset disposal. (Round the intermediate calculations to nearest whole dollar amount.)