On January 1,Year 1,the City Taxi Company Purchased a New

Multiple Choice

On January 1,Year 1,the City Taxi Company purchased a new taxi cab for $36,000.The cab has an expected salvage value of $2,000.The company estimates that the cab will be driven 200,000 miles over its life.It uses the units-of-production method to determine depreciation expense.The cab was driven 45,000 miles the first year and 48,000 the second year.What is the amount of depreciation expense reported on the Year 2 income statement and the book value of the taxi at the end of Year 2,respectively?

A) $8,640 and $19,260
B) $8,640 and $17,260
C) $8,160 and $20,190
D) $8,160 and $18,190