Answer full question. City Taxi Service purchased a new auto to use as a taxi on January 1, Year 1, for $36,000. In addition, City paid sales tax and titlefees of $1,200 for the vehicle. The taxi is expected to have a five-year life and a salvage value of $4,000.Requireda. Using the straight-line method, compute the depreciation expense for Year 1 and Year 2.b. Assume the van was sold on January 1, Year 3, for $21,000. Determine the amount of gain or loss that would be recognized onthe asset disposal. (Amounts to be deducted should be indicated with minus sign.)Year 1 DepreciationYear 2 Depreciationa.per yearper yearb.on sale

Name: Answer full question. City Taxi Service purchased a new auto to use as
Uploaded: 2024-03-05T11:50:36.000Z
Channel: Bartleby
Description: Answer full question. City Taxi Service purchased a new auto to use as a taxi on January 1, Year 1, for $36,000. In addition, City paid sales tax and titlefees of $1,200 for the vehicle. The taxi is expected to have a five-year life and a salvage val

Total cost of taxi = Purchase cost + sales tax and title fees = 36000+1200 = $37200Annual Depreciation (straight line method) = (Cost of the assets - Residual value) / Expected life of the assets = (37200-4000)/5 years = $6640 a. Year 1 Depreciation $6640 Year 2 Depreciation $6640 b. Gain (loss) on sale = sale value - (Cost of the assets - Annual Depreciation x 2 years) = 21000-(37200-6640*2) = ($2920)