On 1 April 20x1, ABC Co. bought a new lorry and made the following payments in relation to it:

Costs as per suppliers list $120,000

Less: Agreed discount 10,000 110,000

Delivery charge 1,000

Installation charge 4,000

Maintenance charge 4,000

Additional component to increase capacity 3,000

Spare parts 3,500

Total 125,500

Lorry is depreciated on the straight-line basis over a four-year life and the estimated residual value $38,000. ABC Co. prepare their accounts on 31 December each year, the company policy is to charge depreciation on a month for month basis. After exactly two years and three months, the lorry is out of order and sold for $23,000.

a) What amount should be used as the basis for depreciation of the lorry?

b) What is the depreciable amount of the lorry?

c) Calculate the depreciation on lorry for each of the years 20x1, 20x2 and 20x3.