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 $20,700. In addition, City paid sales tax and title fees of $980 for the vehicle. The taxi is expected to have a five-year life and a salvage value of $6,640. Required: a. Using the straight-line method, compute the depreciation expense for Year 1 and Year 2. Note: Round your answers to the nearest whole dollar amount. b. Assume the auto was sold on January 1, Year 3, for $18,014. Determine the amount of gain or loss that would be recognized on the asset disposal. Note: Round the intermediate calculations to nearest whole dollar amount. a. Year 1 Depreciation per year a Year 2 Depreciation per year b; on sale