City Taxi Service purchased a new auto to use as a taxi on January 1, Year 1, for $27,300. 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 $5,910.
Required:
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.
Assume the auto was sold on January 1, Year 3, for $22,411. 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.