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City Taxi Service purchased a new auto to use as a taxi on January 1,...

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Accounting

City Taxi Service purchased a new auto to use as a taxi on January 1, Year 1, for $22,200. In addition, City paid sales tax and title fees of $1,240 for the vehicle. The taxi is expected to have a five-year life and a salvage value of $6,110.

Required:

  1. 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.

  1. Assume the auto was sold on January 1, Year 3, for $18,984. 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.

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