According to FAS-52, all non-realized gains or losses are posted to the Cumulative Translation Adjustment (CTA) line on the balance sheet. CTA is typically in the Equity section. FAS-52 requires you to translate different balance sheet accounts at different exchange rates, so CTA is used for the resulting unrealized gain or loss. According to FAS-52, current assets and liabilities are translated at the month-end rate, while long term assets and long-term liabilities are translated at various fixed or historical rates. Also, your equity section line items translate at various fixed or historical rates. You can find more information about FAS-52 (FASB 52) at http://www.nysscpa.org/prof_library/FASB/Fasb52.htm.
FRx accommodates CTA using Rounding Adjustments in the Row Format.
- Create a row in your Row Format called Cumulative Translation Adjustment. You must populate the Link to GL with a non-existent account number that has the same number of characters as your natural account. The non-existent account number must not exist in your General Ledger. In the example below, TRAN is used as the account number.
- Make a note the row codes for your Total Assets row, your Total Liabilities and Equity row, and your CTA row.
- On the Edit menu, click Rounding Adjustments and enter the noted row codes from Step 2. Click OK.
FRx will enter the difference between your Assets, Liabilities and Equities in the row designated as the Rounding Adjustment row which is your CTA row. This will ensure that your Assets will equal your Liabilities and Equities.