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 $21,700. In addition, City pald sales tax and title fees of $970 for the vehicle. The taxi is expected to have a five-year llfe and a salvage value of $5,670. 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 $18,251. Determine the amount of gain or loss that would be recognized on the asset disposal. Note: Round the intermedlate calculations to nearest whole dollor amount