Cumulative Translation Adjustment (CTA) is
A) a separate line on the consolidated income statement stating the FX effect on the company's earnings.
B) a separate equity reserve account stating translation gains or losses over time.
C) a separate margin added to the sale price once the subsidiary is liquidated.
D) a separate account on the subsidiary cash flow statement that needs to be adjusted.

Question

Quizplus · Accepted Answer

Cumulative Translation Adjustment (CTA) is a separate equity reserve account that keeps track of cumulative translation gains or losses over time. It is used to adjust the foreign subsidiary's financial statements to the parent company's reporting currency. The CTA account is included in the consolidated balance sheet and indicates the amount of equity attributable to foreign currency translation adjustments.

Cumulative Translation Adjustment (CTA) Is