Case study: +€40,000 in equity and a better score for the bank
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Published
August 7, 2025
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The client had been accounting for machinery, IT equipment and office equipment as expenses for many years. The capitalization threshold and internal guidelines were missing. After the audit, we reclassified the items as fixed assets, added accounting and tax depreciation retroactively and corrected the balance sheet and income statement. Result: increase in equity by €40,000, better bank rating and approved financing for further growth.
About the client
A medium-sized company with regular investments in production machinery and IT. It was growing faster than accounting processes and guidelines could be updated. Asset records were inconsistent and some purchases ended up directly in expenses.
€100 threshold and undervalued balance sheet
- All purchases over €100 were charged as consumption.
- Assets with multi-year lifespan (machinery, IT, equipment) were not recorded as long-term assets.
- Balance sheet did not reflect the fair value of the company; equity was unnecessarily low.
- Bank score and the ability to obtain financing were worse than the actual condition of the company.
The result: The company was "wasting" capital on itself. Investments were immediately written off to the income statement instead of being amortized over time.
Cooperation objectives
- Introduce correct asset classification and the capitalization threshold.
- Backwards to reconstruct accounting – transfer items to assets and add depreciation.
- Clean up the balance sheet and income statement so that they reflect the real situation.
- Improve banking metrics and prepare documents for the loan.
- Create internal directive and simple workflow, to prevent the problem from recurring.
Our intervention: audit, reclassification, depreciation, repairs
- Mini-audit of purchases (recent years)
We identified items with multi-year lifespans and matched invoices to specific pieces of assets (inventory numbers, acquisition date, warranty). - Asset classification and depreciation schedules
We divided assets into classes (machinery, IT, office equipment), set up accounting and tax depreciation, and completed the registration cards.
Retroactive calculations and accounting corrections
We reclassified items from consumption to assets, added accumulated depreciation and corrected balance sheet also operating result. We have prepared clear workings for the bank.
Do you want to know if this applies to you too?
We offer accounting audit: we will review recent purchases, recommend reclassifications, and prepare a short guideline.
Book a 30-minute consultation.
Results in numbers
Metrics | Before | After |
Equity | undervalued | +40000€ |
Fixed asset records | incomplete/incorrect | complete cards and depreciation |
Bank rating | weaker | improved, approved loan |
Risk of classification errors | high | low (guideline + control) |
How to avoid such a situation?
- There is no universal amount. Capitalization is decided by lifespan a significance for the closing, not just the price.
- Internal directive is a must-have: capitalization threshold, typical examples, responsibilities.
- Asset registration cards and maintain depreciation schedules on an ongoing basis, not once a year.
- Monthly CAPEX review with purchasing/IT catching most errors before they spill over into the income statement.
Summary
Proper asset classification is not „extra paperwork,“ but direct value in the balance sheet. In this case, it brought +40 000 € in equity, cleaner numbers and better access to financing.