Mortlake Ltd owned a building that had cost £42,000 just before the end of the cur- rent accounting year on 31 December, and a vehicle bought for £13,000 at the same time. A new access road was announced on the statement of financial position date, perhaps making the building worth about £50,000 on the open market. Inventory existing at the statement of financial position date had been bought for £7,000, but had deteriorated in storage and was now valued at £6,000. Trade receivables and trade payables at the statement of financial position date were £4,000 and £5,000 respectively.
You are required to prepare the statement of financial position, including the equity figure as the amount needed to make the statement of financial position balance. For each item where there is a choice of valuation, you should briefly note down why you have chosen the valuation you have.