Exercise 8-11A (Algo) Events related to the acquisition, use, and disposal of a tangible plant asset: straight-line depreciation LO 8-2, 8-5 City Taxi Service purchased a new auto to use as a taxi on January 1, Year 1, for $23,700. In addition, City paid sales tax and title fees of $1,100 for the vehicle. The taxi is expected to have a five-year life and a salvage value of $6,750. Required a. Using the straight-line method, compute the depreciation expense for Year 1 and Year 2. b & c. Assume that the taxi was sold on January 1, Year 3, for $20,217. Prepare the general journal entries to record the Year 1 depreciation and sale of the taxi in Year 3.