Cumulative Translation Adjustment (CTA) is a special type of account that is required for consolidated balance sheets in NetSuite OneWorld accounts with multi-currency enabled.
The CTA is used on the consolidated balance sheet to make it balance. This account is necessary because consolidated exchange rate types of the accounts on the balance sheet may differ. The result is different consolidated exchange rates, which cause an imbalance. Three types of consolidated exchange rates apply to different account types during consolidation:
- Current rate – Applies to most asset and liability accounts
- Average rate – Applies to all income statement accounts, such as income and expense.
- Historical rate – Applies to accounts in the capital section of the balance sheet including equity and dividends.
NetSuite dynamically calculates CTA for each account and then displays the total in the CTA account line. You can customize balance sheet reports to include a column titled Translation Adjustment. This column shows the amount resulting from the difference between the consolidated exchange rate that is used on each account and the current exchange rate.
The CTA is used wherever consolidation across accounts with different consolidated rate types occurs, such as the consolidated trial balance.