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 $1.490 for the vehicle. The taxi is expected to have a five-year life and a salvage value of $6,850. 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 $18.462. Determine the amount of gain or loss that would be recognized on the asset disposal. (Round the intermediate calculations to nearest whole dollar amount.) Answer is complete but not entirely correct. a Year 1 Depreciation Year 2 Depreciation Gain 4.740 per year $ 4,740 per year on sale 3,000 1b