23 February 2006
We act for a small family trading company. The freehold of the company's premises is owned as to one quarter by the company and three quarters by members of the family of the managing director. The freehold was purchased many years ago for £100,000. The cost figure on the company's balance sheet was therefore £25,000. A 20-year lease was granted to the company in 1992, after which considerable improvement expenditure was incurred, amounting to £75,000. So the company's balance sheet shows £100,000 cost. Consideration is now being given to a possible sale of the premises.
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