A warehouse bought for £400,000 in 2015 can sit on the books at £300,000 while an estate agent values it at £650,000 — and both figures are correct. This article unpacks the difference between historical cost and fair value accounting, why UK SME balance sheets rarely reflect true market worth, and the specific moments — selling up, borrowing, insuring — when you need a real valuation instead.
IFRS 16 now forces most leases—office space, vans, photocopiers—onto the balance sheet as a right-of-use asset and lease liability. This guide walks through why the change happened, a worked five-year office lease example with journal entries, and what it means for covenants, EBITDA and management reporting.
