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

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 would be the depreciation expense reported on the Year 2 income statement and the book value of the taxi, respectively, at the end of Year 2?

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