NetSuite Financial topics – CTA, Exchange rate Gain/Loss

Currency Translation Adjustment (CTA) 

1. CTA is meant to reflect currency fluctuations during consolidation. 
2. For example, if the Indian subsidiary (base currency INR) has ₹1,00,000 in retained earnings and the INR-USD rate changes from 83 to 85, NetSuite calculates the translation difference during consolidation and posts a CTA adjustment in the Netherlands parent (base currency USD). 
3. In NetSuite, CTA is calculated during Calculate Consolidated Exchange Rates. 

Realized Gain/Loss 

1. Automatically calculated when foreign currency transactions are settled (e.g., invoice payments). 
2. For example, an invoice for ₹10,000 created when the INR-USD rate is 83 and paid when the rate is 85 results in a realized loss, as the USD received is less than originally recorded. 

Unrealized Gain/Loss 

1. Represents the impact of exchange rate changes on open foreign currency balances. 
2. For example, a vendor bill for ₹10,000 is recorded when the INR-USD rate is 83 (USD 120.48). At month-end, the rate changes to 85 (USD 117.65). Since the liability is still open, NetSuite calculates an unrealized loss of USD 2.83 during the Revalue Open Foreign Currency Balances task. 
3. Calculated during Revalue Open Foreign Currency Balances.