Cumulative Translation Adjustment Exposing the Detail

Cumulative Translation Adjustment

Purpose: To provide the detail behind the cumulative adjustment row on the consolidated balance sheet.

The Cumulative Translation Adjustment (CTA) as a special type of account required when multi-currencies in NetSuite OneWorld accounts are enabled and is only used on the consolidated balance sheets. The CTA account is necessary because the rate types of the accounts on the balance sheet may differ, resulting in different rates being used that can cause an imbalance. The CTA balances the consolidated balance sheet.

Exposing the Detail – The income statement is where the detail can be revealed:

• Format an income statement and include the following columns:
  • Amount (Current Rate)
  • Formula Field = Amount (Current Rate) – Amount
    • The value in this field is the difference between the transaction at the current rate and the transaction at the average rate. This becomes the value in the CTA line on the balance sheet.
  • The Amount (Current Rate) column will show the transaction amount converted using the current exchange rate.
  • The Amount column will show the transaction amount using the average rate or the rate set on the account.
  • Set the date range on your Income Statement from the beginning 1^st period the customer transacted in through the current month.
  • Modify the income statement to include more data such as date, transaction number, etc.
  • The Income Statement must be left at the top consolidated level.

Balance Sheet:

• Format a balance sheet and include the same two columns above.
  • Amount (Current Rate)
  • To cross reference the CTA total – take the difference between Amount (Current Rate) and Amount column – this is the CTA total on the Retained Earnings row and the Net Income row. Unfortunately you cannot add a formula field to sum the two since the CTA is a dynamic total.

Note: must be the consolidated top level.

To validate deeper – add a subsidiary filter to the Income Statement report and set to one foreign sub. You do not want to filter the using the Subsidiary Context on the front of the report, leave this the highest consolidated level. Set the same subsidiary filter on the income statement and the balance sheet.

2016.1 Added functionality:

• Show the CTA balance by month on the Balance sheet.
  • It is a personal preference – KPI Scorecard with periodic specific consolidation rates. When that is checked AND you uncheck the cumulative checkbox on the alternate date range it makes the cumulative translation amount for the period only.

If you have any NetSuite customization or consulting needs, including this topic of cumulative translation adjustment as shown above, the NetSuite professionals at RSM can help.  We are a NetSuite Solution Provider and a NetSuite Systems Integrator partner, and have more than 30 years experience implementing ERP solutions.  We’ll provide you with industry insight, project management and the technical resources you need to make your project a success. Contact RSM at erp@rsmus.com or by phone at 855.437.7202   .

By: Monica Smith – Iowa NetSuite Solution Provider

Monica Smith