Cumulative Translation Adjustment

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Cumulative Translation Adjustment (CTA) account

An entry in a translated balance sheet in which gains and/or losses from translation have been accumulated over a period of years. The C.T.A. account is required under the FASB No. 52 rule.

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The cumulative translation adjustment (CTA) is released into earnings.

Foreign Currency Matters: New Guidance for Derecognition of Cumulative Translation Adjustments

In addition, a firm must report the cumulative translation adjustment, the lag cumulative translation adjustment, the transaction gain or loss, net income, and the foreign income tax.

The value relevance of the foreign translation adjustment

As we have seen, the cumulative translation adjustment is a directionally correct approximation for the change in cashflow caused by FX fluctuations.

Why derivatives don't reduce FX risk

The adjustment resulting from translating nonmonetary items denominated in the local currency at the rate in effect at the date of the change is classified as a cumulative translation adjustment component of stockholders' equity.

Foreign currency translation, EPS and ESOPs and alternative revenue programs of rate-regulated utilities

EITF Topic D-71 considers the changeover to the euro a change in functional currency but says that the cumulative translation adjustment account should not be changed until there is a disposition of the investment.