B: The cumulative translation adjustment account affects the amount of gain or loss reported upon the sale of a foreign subsidiary. -The cumulative translation adjustment is a plug figure to balance the trial balance. 8m. The cumulative translation adjustment(CTA) for a foreign currency translation adjustmetn arises as the all of the monetary assets (cash, financial assets, etc. Following are the subsidiary’s financial statements (in GBP) for the most recent. Fiscal year is October-September. ASC 320-10-40-2. In this article, we walk through a concrete example of how this works for an example business. Cumulative Translation Adjustment/Unrealized For. Following is an analysis of the changes in the cumulative foreign currency translation adjustment account, net of. Exch. 45 4. (Input all answers as positive. Compute the translation adjustment for the year 2020 a. The correct answer is A. Compute the ending Cumulative Translation Adjustment directly, assuming a BOY balance of $115,375. A. What is a Foreign Currency Transaction Adjustment? In translating foreign currency financial statements into parent company currency using the current rate method, a translation adjustment can be calculated as a balancing amount. 13 – 1. 20 0. Who are the experts? Experts are tested by Chegg as specialists in their subject area. a derivatives hedge is necessary to bring balance to the consolidated balance sheet after an exchange rate. d. When a net translation exposure exists, a cumulative translation adjustment account is necessary to bring balance to the consolidated balance sheet after an exchange rate change. The unit of account in ASC 815 is generally the individual derivative. Adjustments that result from the difference in the foreign currency exchange rates post to the Cumulative Translation Adjustment-Elimination (CTA-E) account. A cumulative translation adjustment in a translated balance sheet summarizes the gains and losses from varying exchange rates. Income/loss in the income statement b. - The subsidiary's December 31,2019 , retained earnings balance was C $140, 590, an amount that has been. Sociedad Quimica y Minera De Chile S. gc. the effect that an unanticipated change in exchange rates will have on the consolidated financial reports of an MNC. Net income 45,000. The difference between these rates is captured within the Cumulative Translation Adjustment account. Adjustments can occur over the course of multiple accounting periods, as for. During the measurement period, the acquirer then retrospectively adjusts those provisional amounts as it obtains the. How is CTA used in financial statements? Example 1: The tax effect of cumulative translation adjustments would be allocated specifically to other comprehensive income, whereas the tax effect of a tax rate change for the current year would be reflected in continuing operations. Question: 1. P568, B. The subsidiary will credit its liability for €472,000. 25 The December 31, 2019, consolidated balance sheet reported a cumulative translation adjustment with a $46,950 credit (positive) balance. the cumulative translation adjustment. 6M (404K) Unrealized Gain/Loss Marketable Securities. The translation adjustment of USD 1,009 above results from translating from EUR to USD. 5. The translation process totals the translated debits and credits for all account combinations sharing the same primary, second, and third balancing segment values. A CTA entry is required under the Financial Accounting Standards Board. R . 4. C: Changes in the cumulative translation adjustment account are added back in the computation of net cash flow from operating activities since they are non-cash income or expense. Translation gain/loss as a component of the net income. Cumulative translation adjustment (CTA) Exchange differences referred to in IAS 21. . The Historical Accounts group contains Historical accounts with a Rate Override or an Amount Override for translation. You are able to essentially create a Balance Sheet. Process eliminations in a consolidated or elimination company – You can process and post eliminations as a single process during consolidation. A Cumulative translation adjustment (CTA) summarizes the gains and losses resulting from varying exchange rates over time. account is required under the FASB No. retained earnings. When the initial accounting for a business combination is not complete by the end of that reporting period, the acquirer reports provisional amounts for any incomplete items. C. Gain (414M) (450M) (403M) (448M) (445M) Unrealized Gain/Loss Marketable. e. translation adjustments are included in the cumulative translation adjustment (CTA) account, which is a component of other comprehensive income: The application of the measurement and translation processes starts with an understanding of the following concepts and definitions. ) for 2019 and. Current Rate Method & Financial Statement Effects. 50 = C $1. The CTA account achieves balance when there is more than one currency. Assets and Liabilities. If you have multiple companies or. FSP 9. S. All gains or losses from translation are reported as a cumulative translation. e) Accumulated other comprehensive income. Cumulative translation adjustment as a deferred liability on the balance sheet d. 0300 3,000 13,500. Gain (5. Foreign Exchange (FX) to Cumulative Translation Adjustment (CTA) Historical accounts will always be translated using the default rate for the account unless the account has the exchange rate type of "Historical Amount Override" or "Historical Rate Override". Assuming the foreign currency is the functional currency, what is the translation adjustment for 2017? The December 31, 2016, U. Compute the ending Cumulative Translation Adjustment directly, assuming a BOY balance of $32,452. A "plug" equity account, named cumulative translation adjustment (CTA), is used to make the balance sheet balance, since translation gains or losses do not go through the income statement according to this method. 1 Unit of account. . Exch. A cumulative translation adjustment in a translated balance sheet summarizes the gains and losses from varying exchange rates. Direct computation of translation adjustment:Answer. Expert-verified. If you have posted manual journal entries to the CTA account, a separate Cumulative Translation Adjustment account line displays the balance from manual journal entries. none of the options. Investopedia uses cookies to provide you with a great user experience. The disclosures required by (b) and (d) shall exclude cumulative basis adjustments related to foreign exchange risk. Compute the ending Cumulative Translation Adjustment directly, assuming a BOY balance of $273, 564. The CFO is unsure whether the cumulative translation adjustment should be removed from equity, and if so, to what other account it should be transferred. Exch. S. The intraperiod allocation rules can get quite complex and yield some very non-intuitive results. 50. Intercompany Clearing XXX (deferred Cost of Goods Sold (COGS)) For more information about features and system-generated accounts, see Feature-Specific, System-Generated Accounts. The foreign currency translation adjustment, also known as the cumulative translation adjustment CTA, aggregates all of the changes produced by fluctuating exchange rates. Step 4. Cumulative 3-year inflation in excess of 100%. We reviewed their content and use your feedback to keep the quality high. Learn how to record the translation adjustment that arises from translating a foreign entity’s financial statements into the reporting currency, when the functional currency is a foreign currency. At the same time, Pyramid paid P8,250 cash to acquire a 90-day call option for £725,000. creat D. These gains and losses post to the Cumulative Translation Adjustment – Elimination (CTA-E) account. Converting the language. Foreign currency translation–This is the process of expressing a foreign entity’s functional currency financial statements in the reporting currency. more. Exch. Exch. Undeposited Funds. A translation adjustment can affect consolidated net income. It adjusts the balance sheet to compensate for the difference between the consolidated exchange rates of different account types, such as assets, liabilities, income, and equity. Line 23b. A Cumulative Translation Adjustment (CTA) is a line in an accounting statement that addresses gains and losses created by exchange rate changes. Looking at the nine-month period to 30 September and revenue was up by 18. If the process of converting the financial statements of a foreign entity into the reporting currency of the parent company results in a translation adjustment, report the related profit or loss in other comprehensive income. The translation adjustment from translating a foreign subsidiary's financial statements should be shown as. 5. DH 8. The balance sheet risk exposure associated with the current rate method is equal to the foreign subsidiary’s net asset position. Overall, the CTA is an important. NetSuite does not support running multiple intercompany elimination process at the same time. Study with Quizlet and memorize flashcards containing terms like During the translation process, the current year change to the cumulative translation adjustment is a function of which of the following: 1) Its operating cash flows 2) Its monetary assets minus monetary liabilities 3) Its current assets minus current liabilities 4) Its total assets minus total. T. ASC 815-10-50-4CCC(b) DG 12. Example FX 7-1 illustrates the application of this guidance. Gain. 174K (2. CTA-E has two purposes: Acts as the clearing account for intercompany elimination journal entries. The foreign currency translation reserve contains the cumulative translation adjustments on the translation of an entity’s net investment in a foreign operation in the consolidated financial statements. ASC 830-30-40-1 requires CTA to be reclassified from equity to net income “upon sale or upon complete or substantially complete liquidation of an investment in a foreign entity. the foreign subsidiary is about to be liquidated, so that the value of its Cumulative Translation Adjustment (CTA) would be realized; the foreign subsidiary is operating in a hyper inflationary environment ; the firm has debt covenants or bank agreements that state the firm's debt/equity ratio will be maintained within specific limitsCurrency translation – You can set up the account ranges and rates to translate from the accounting currency of the source company to the accounting currency of the consolidation company. In this method, inventory, fixed assets, accumulated depreciation, cost of. The subsidiary maintains its books in the British pound (GBP) as its functional currency. ’s balance sheet. Cumulative translation adjustment, before income taxes (1 ) 26 (22 ) 26 Income taxes related to items of other comprehensive income - - - - Other comprehensive income (loss), net of tax. 5. Such adjustments may be required when the currency of a subsidiary is different from the reporting currency of the reporting company. 9m. 1M. A positive cumulative translation adjustment of €685 is needed as a balancing amount, which is reported in the stockholders’ equity section. b. CTA-E has two purposes: Acts as the clearing account for intercompany elimination journal entries. Compute the ending Cumulative Translation Adjustment directly, assuming a BOY balance of $(766,748). Direct computation of translation adjustment: $ Net income x (EOY - Average exchange rate) EOY cumulative translation adjustment General Journal Description Debit Credit To record the translation adjustment. From my experience, in the HFM world equity translation is most commonly handled through a set of so-called “override” accounts. Who are the experts? Experts are tested by Chegg as specialists in their subject area. Expert Answer. Cumulative Translation Adjustment/Unrealized For. The Cumulative Translation Adjustment YTD on Figure 6 of -2,100 is not on Figure 7. a. The financial statements of many companies now contain this balance sheet plug. 5810 (8,715) Net asset position translated using rate in effect at date of transactions---34,689 Exposed net asset position - 12/31 60,000. Translation of financial statements Assume that your company owns a subsidiary operating in Brazil. e cumulative translation adjustment. You can run intercompany elimination for a period multiple times, as needed. Cumulative Translation Adjustment (CTA) account. subsidiariesCumulative Translation Adjustment/Unrealized For. Cumulative Translation Adjustment/Unrealized For. It is an entry in a translated balance sheet in which gains and/or losses from translation have been accumulated over a period of time. Solution. B. Gain (1. - Currency exchange rates for 1 Ps applicable to the Mexican operation follow: - The December 31, 2019, consolidated balance sheet reported a cumulative translation adjustment with a $40, 950 credit (positive) balance. For those foreign entities located in a highly inflationary economy, U. accounting exposure. Cumulative Translation Adjustment/Unrealized For. Gain-----Unrealized Gain/Loss Marketable Securities. SIC-30 was superseded and incorporated into the 2003 revision of IAS 21. This account is necessary because the rate types of accounts may differ, which results in different rates being used that can cause an. Ending RI - Beginning RI + Dividends). Foreign Exchange (FX) Calculations L—T liabilities Common stock APIC Ret. 30 November 2016: 0,8525. Translation exposure refers to A. parent companies that operate in highly inflationary economies are required by GAAP to use which method for translating the financial statements: a) Temporal Method, with the Cumulative Translation Adjustment to be reported as part of Comprehensive Income. The Cumulative Translation Adjustment (CTA) is an entry in the accumulated other comprehensive income section of a balance sheet (translated into the reporting currency), in which gains and/or losses from FX translation have been accumulated over a period of years. Consolidated balance sheet and cash flow statement reports use a special account called Cumulative Translation Adjustment (CTA). Total assets minus total liabilities. a. Translation of financial statements (2 years) Assume that your company owns a subsidiary operating in Australia. The foreign currency translation adjustment or the cumulative translation adjustment (CTA) compiles all the fluctuations caused by varying exchange rate. S. Round all answers to the nearest dollar. 16. Study with Quizlet and memorize flashcards containing terms like During the translation process, the current year change to the cumulative translation adjustment is a function of which of the following: 1) Its operating cash flows 2) Its monetary assets minus monetary liabilities 3) Its current assets minus current liabilities 4) Its total assets minus total liabilities, A foreign subsidiary's. Compute the ending Cumulative Translation Adjustment directly, assuming a BOY balance of $273, 564. 14B) (1. gc. In cumulative translation adjustment until the hedged net investment is sold or liquidated. Therefore, the German subsidiary must adjust its liability to Parent Company A from €6,961,000 to €7,433,000. Gain (1. This is a consolidation of various issues faced in this area, and thus provides the tips to resolve them. Fin. BOY cumulative translation adjustment $(102,848) Answer Answer [E] Answer Current-year translation gain (loss) 179,596: Answer [C] Answer Answer [D] Answer EOY cumulative translation adjustment: $76,748: Answer Answer Balance sheet: Assets. CTA = Cumulative Translation Adjustment (CTA) is not calculated through a calculation, this is simply the difference b/w DR and CR after translation is run. Gain. Cumulative differences are “plugged” into a cumulative translation adjustment account. Cumulative translation adjustments or CTA, are summarized entries regarding gains or losses incorporating the exchange rate fluctuations. Intercompany Clearing XXX (deferred Cost of Goods Sold (COGS)) For more information about features and system-generated accounts, see Feature-Specific, System-Generated Accounts. Converting the language. 19 1,606,500 Cost of goods sold -810,000 $1. 09 = 0. Cumulative Translation Adjustment/Unrealized For. B. When investigating problems in these areas the solution is often in the relevant Technical Briefs which also. -The cumulative translation adjustment. Under FASB 52, when a net translation exposure exists, Multiple Choice. It is an entry in the accumulated other comprehensive income section of a translated balance sheet. Net income x (EOY - Average. Net loss in the income statement. This results in different rates being used and can cause an imbalance. In order to calculate the cumulative translation adjustment, Net assets, 1/1/Y1 which is $8,000 also needs to be applied by $1. -The cumulative translation adjustment reflects changes in the fair values of marketable securities on the balance sheet. Revaluation launches a process that revalues the ledger currency equivalent balances for the accounts and currencies you select, using the appropriate current rate for each. Gain. The C. g. (2 words) 1. There are 2 steps to solve this one. Accumulated other comprehensive income (OCI) is a line item in the shareholders' equity section of the balance sheet that includes income that is not reported in the income statement. Accountants are often asked to proof monthly CTA amounts to ensure they are correct. For each of the items listed below, state whether they increase or decrease the balance in cumulative translation adjustments (assuming a credit balance at the beginning of the year)when the foreign currency strengthened relative to the U. S. The financial statements of Hello and GutenTag as at 31 December 2016: Prepare consolidated statement of cash flows for the year ended 31 December 2016. a. The current rate method must be used when the foreign currency is chosen as the functional currency. -Changes in the cumulative translation adjustment are reflected in net income for the period. View all THC assets, cash, debt, liabilities, shareholder equity and investments. How is the cumulative translation adjustment solved for?-in balance sheet and for current method-computed on 1/1 carryforward balance +/- current period translation gain or loss, its a plug that falls out of the trial balance. You are able to essentially create a Balance Sheet. 50. 4. Prepare a schedule to verify the translation adjustment. all balance sheet accounts are translated at the current exchange rate, except for stockholders' equity. Average in 2016: 0,8188. 4 . The investor incurs cumulative translation adjustment (CTA) in other comprehensive income (OCI) due to foreign exchange (FX) fluctuations of $16 (credit). Do not round your answers for part b. Second quarter 2021 net sales by business segment and operating profit (loss) by business segment compared with the first quarter of 2021 and the second quarter of 2020 are as follows. C. BOY cumulative translation adjustment. Cumulative Translation Adjustment/Unrealized For. -Changes in the cumulative translation adjustment are reflected in net income for the period. Direct computation of translation adjustment + $ Net income x (EOY - Average exchange rate) EOY cumulative translation adjustment Please answer all parts of the question. The empirical tests are conducted on a sample of 204 U. An entry in a translated balance sheet over a period of years. Often, the. The ASU is intended to resolve diversity in practice about whether Subtopic 810. The CTA line item presents gains and. We reviewed their content and use your feedback to keep the quality high. The cumulative translation adjustment is typically recorded as part of equity. *BOY net assets x (EOY rate - BOY rate) Net income x (EOY rate - Avg rate) - Dividends x (EOY rate - rate @ div declaration) = CTA for that year. Note: The Cumulative Translation Adjustment (CTA) account is required for ledgers running translation. This is the ‘CTA’ required to make the Balance Sheet remain in balance – because: We converted the Assets & Liabilities on Figure 6 at the using the Current FX Rate prevailing at the end of February. (2,945). Earnings per share (EPS. 3 Disposition of. Equipment is translated at the historical exchange rate in effect at the date of its purchase. Cumulative translation adjustment – debit (2,000,000) Problem 7-Share capital 6,000, Share premium 3,500, Cumulative translation adjustment – debit 2,000, Treasury shares, at cost 700, Retained earnings 1,500, Designated as cash flow hedge 600, Cumulative unrealized gain on option contract;Palmerstown 8 a larger number when reported in dollars. 5. The company’s cumulative translation adjustment (CTA) should include all the translation adjustments arising from foreign currency translation. Cumulative Translation Adjustment (CTA) account. Sales are made and all expenses are incurred uniformly throughout the year. Cumulative Translation Adjustment/Unrealized For. Barclays PLC ADR Annual balance sheet by MarketWatch. CTA stands for Cumulative Translation Adjustment or Currency Translation Adjustment. Foreign currency translation adjustment (460) (86) (977) (243) Unrealized net loss on marketable securities (5) — (19) — Comprehensive income 2,866 1,573 7,884 3,058 Less: Comprehensive income attributable to noncontrolling interests and redeemable noncontrolling interests in subsidiaries 39 41 11 103Define a “highly inflationary economy according to FASB ASC 830, Foreign Currency Matters. When consolidating a foreign subsidiary, which of the following statements is true. A. Cumulative Translation Adjustment. Updated June 24, 2022 CTAs, or currency trade adjustments, are ways to identify how changes in exchange rates affect the value of your international purchases. CTA is a line item in the balance sheet that shows the gains and losses created by exchange rate fluctuations. The British pound is Suffolk's functional currency. A Cumulative Translation Adjustment (CTA) is a line in an accounting statement that addresses gains and losses created by exchange rate changes. ). 50 . d) Cumulative translation adjustment as a deferred asset. 1,775 debit b. 6. S. ) are translated at the current rate, but the non-monetary assets are translated at the historical rate. A) The cumulative translation adjustment is a plug figure to balance the trial ba nce B) C) D) Changes in the cumulative translation adjustment are reflected in net income for the period The cumulative translation adjustment reflects changes in the fair values of marketable securities on the balance sheet. Expert Answer. Created with Highstock 2. Effective date of IAS 21 (1983) 1993. Converting financial statements prepared under foreign GAAP into domestic GAAP B. The measurement process of translation, known as the current rate method, depends on the financial statement classification:. Ltd. translation using the current exchange rate. Bgc 1,775 credit c. Cumulative Translation Adjustment Account In accordance with SFAS 52 (U. Gain-----Unrealized Gain/Loss Marketable Securities. Gain (92K) 50K (847K) (17K) 563K. cumulative translation adjustment as a deferred liability. GAAP 2019: UK reporting – FRS 102 (Volume B)A) The cumulative translation adjustment is a plug figure to balance the trial ba nce. Net income for the year. 6M) (7. It is an entry in the accumulated other comprehensive income section of a translated balance sheet. The subsidiary's financial statements (in AUD) for the prior and most recent years follow in part a. A CTA entry is required under the Financial Accounting Standards Board (FASB). English Subs. dollar-translated balance sheet reported retained earnings of $107,500 and a cumulative translation adjustment of $24,550 (credit balance). The other three translation methods pass foreign exchange gains or losses through the income. Cumulative Translation Adjustment/Unrealized For. Tracks the foreign currency translation adjustment amounts that result from elimination journal entries. However, in this example the currency translation will still take place even though we have for amount in group currency coming from ACDOCA. Finance questions and answers. 14B) Unrealized Gain/Loss Marketable. 2023 2022 2021 2020 2019 5-year trend; Net Income before Extraordinaries----- The amendments in this Update resolve the diversity in practice about whether Subtopic 810-10, Consolidation—Overall, or Subtopic 830-30, Foreign Currency Matters—Translation of Financial Statements, applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling. Accounting questions and answers. DH 8. Question #3: What is the annual change in the translation adjustment for Year 2? Question #4: What is the cumulative translation adjustment at the end of Year 2? Exercise 12-13 Year 1 Rupees Dollars Year 1 Debits Cash Receivables Inventory Fixed Assets 100,000 450,000 680,000 1,000,000 0. ca. Step 1. Cumulative translation adjustment – debit (2,000,000) Problem 7-Share capital 6,000, Share premium 3,500, Cumulative translation adjustment – debit 2,000, Treasury shares, at cost 700, Retained earnings 1,500, Designated as cash flow hedge 600, Cumulative unrealized gain on option contract;Cumulative Translation Adjustment/Unrealized For. B. For all other translations, exchange rates have been used for. 31 December 2016: 0,8562. NetSuite adds the system-generated Cumulative Translation Adjustment-Elimination (CTA-E) account to your chart of accounts after a user enters a qualifying transaction. Cumulative Translation Adjustment/Unrealized For. The applications can be configured to include the CTA account in the balance sheet, or in comprehensive income. Exch. The Cumulative. Cumulative Translation Adjustment Proof. Do not enter a Default Period End Rate Type or Default Period Average Rate Type. Current-year translation gain (loss)175,862Answer [C]Answer. had a negative cumulative translation adjustment of ($250,000) on its balance sheet pertaining to its investment in Subko, Ltd at the point in time that Parentco sold its interest in Subko. Gain. 5. Fiscal year is October-September. dollars. 10. 38B) Revaluation Reserves. 2 Analysis of changes in cumulative translation adjustment. Exch. View all CINF assets, cash, debt, liabilities, shareholder equity and investments. Problem 5-7 (IAA) Bronze Company provided the following information at year-end: Share capital Share premium Cumulative translation adjustment - debit Treasury shares, at cost Retained earnings Cumulative unrealized gain on option contract designated as cash flow hedge 6,000,000 3,500,000 2,000,000 700,000 1,500,000 600,000 What is the. A . 4. 6 billion in 2006. 50. Learn how to record the translation adjustment that arises from translating a foreign entity’s financial statements into the reporting currency, when the. Cumulative translation. You can also click the amount for the Cumulative Translation Adjustment in the Balance Sheet, Comparative Balance Sheet, and Trial Balance to open this report. Businesses that operate on a global scale must convert transactions such as asset acquisitions or service purchases into their functional currency. This rule executes after translations, but before the Foreign Exchange/Cumulative Translation Adjustment (CTA) calculations. The entry on Line 23a should allow the IRS to differentiate between the actual day-to-day operational gains and losses and those caused due to foreign currency translation. 2m in positive cumulative translation adjustment. Monetary assets and liabilities (those whose value does not fluctuate over time - cash, receivables, payables) Translated at the current exchange rate Nonmonetary assets and liabilities and stockholders' equity accounts (those whose value does fluctuate over time - inventory, investments, fixed assets, etc. b. 0300 3,000 13,500. As shown in Exhibit 1, eBay’s currency translation adjustments (CTA) accounted for 34% of its comprehensive income booked to equity for 2006. This account line is used in consolidated balance sheet and trial balance reports. Answer [D]Answer. All values USD Millions. The subsidiary maintains its books in the British pound (GBP) as its functional currency. . Cash: $1,526,569: Answer Answer Accounts receivable: 1,768,320: Answer Answer. For non-monetary items, remeasurement uses historical rates. InFusion America Primary Ledger is using the subledger level. b. 4. Expert Answer. See Answer See Answer See Answer done loadingThat is your Cumulative Translation Adjustment. The subsidiary's beginning (1/1/20) retained earnings and cumulative translation adjustment (credit) in dollars were $75,948 and $36,462, respectively. When a foreign currency is the functional currency, foreign currency balances are translated using the current rate method and a cumulative translation adjustment is reported on the_______________ _________. Any differences arising out of translation for Balance sheet accounts and P&L accounts owing to a difference in average rate and period end rates will be posted to this particular account. All values USD Millions. Compute the ending Cumulative Translation Adjustment directly, assuming a BOY balance of $197,060. Unrealized Gain/Loss Marketable Securities-----Revaluation Reserves. 50. us Financial statement presentation guide 6. Financial Statement Reporting: ASC 830-30-45-13. more. Process eliminations in a consolidated or elimination company – You can process and post eliminations as a single process during consolidation. 4 million related to a joint venture investment located in South Africa. Year 2's total translation adjustment is $8,000 as of the end of the year. Other. S. Compute the ending Cumulative Translation Adjustment directly, assuming a BOY balance of $197,060. ), when you translate your actual balances into another currency, General Ledger automatically sets the balance of the Cumulative Translation Adjustment account to the net difference needed to balance your translated chart of accounts. A cumulative translation adjustment in a translated balance sheet summarizes the gains and losses from varying exchange rates. 44 4. Comprehensive income is a statement of all income and expenses recognized during a specified period. Cumulative Translation Adjustment account: This account is necessary if you choose to translate your functional currency balances into another currency for reporting. The difference between the consolidated historical carrying values (which would have been a function of the exchange rate that existed when the assets or liabilities arose), and the new translated values using the current exchange rate, is recorded to the cumulative translation adjustment (CTA) account. The subsidiary’s financial statements (in BRL) for the most recent year: PLEASE SOLVE FOR A AND B. The balance recorded in the cumulative translation adjustment account, which was created from the translation process in prior periods, is not reversed when a foreign entity changes its functional currency because it is operating in a highly inflationary economy. 46B) (1. This would result in the investor deconsolidating a portion or all of its foreign operations. (Round answers to 0 decimal places, e. The foreign currency translation adjustment or the cumulative translation adjustment (CTA) compiles all the fluctuations caused by varying exchange rate. There are multiple SuiteAnswers articles on this. When you run the intercompany elimination process at period close, NetSuite eliminates the revenue and expense directly to the CTA-E account.