The Consolidated Exchange Rates table includes three consolidated exchange rate types. Current, Average, and Historical.
The consolidated exchange rate types and the types of accounts that use them are as follows:
- Average – The weighted average of the currency exchange rates for all transactions posted during the period to accounts with a rate type of Average. This rate is used to translate accounts in the income statement and to build retained earnings.
- Current – Also referred to as ending rate. This rate is the currency exchange rate that is effective at the end of the reported upon period. This rate is used for most asset and liability accounts in the balance sheet.
- Historical – Same as Average rates, except for accounts with a rate type of Historical. This rate is used for equity accounts and owners’ investments.
The difference between values of consolidated exchange rates types results in a balance in the line for Cumulative Translation Adjustment (CTA) on some financial statements. This account line is used in consolidated balance sheet and trial balance reports. The CTA represents the cumulative foreign currency gain or loss resulting from the net investment in the subsidiary.