How does CTA work?
CTA (Cumulative Translation Adjustment) is a system account used to adjust for the differences in exchange rates due to different exchange rate types being used for roll-up conversions within a single supposedly-in-balance portion of the account structure. The CTA values do not "roll up" in the traditional sense. That is, the CTA value at a given parent level in the organization is not the sum of the CTA of all of its child levels. Instead, CTA is calculated at the parent level which is selected on the sheet. If the parent level on which the calculation is occurring does not have any child levels with different currencies, there is no CTA. This means the CTA will be blank.
If the parent level on which the calculation is occurring does have child levels with different currencies, here is how the CTA would calculate.
For all accounts under the Assets roll-up, find all accounts which are not using Exchange Rate Type EOM. Calculate what their value would be if they were using EOM, and subtract that from the values they have using their assigned Exchange Rate Type to find the difference. Sum all of these values together into a single number. Then do the same calculation for all accounts under the Liabilities and Equities roll-up. Subtract the difference value of the Asset accounts from difference value of the Liabilities and Equities value. This is now the value of CTA at the parent level, in the currency of the parent level.
The logic used in the formula for the CTA is automatically created in the system and cannot be edited. The value also cannot be overwritten on the sheet. The formula would look similar to the one below:
(Assets converted using their assigned exchange rate type - Assets converted using EOM) - (Liabilities & Equity converted using their assigned exchange rate type - Liabilities & Equity converted using EOM)
To turn on the CTA, take the following steps.
1. Go to Modeling > Currencies
2. Check the Enable cumulative translation adjustment (CTA) box
3. Click OK.
The CTA Account will placed in the Equities rollup within the General Ledger structure.
UPDATE: As of the 2017.2 release, CTA will evaluate on child levels when viewing a sheet in View by Level, assuming the above currency conditions and exchange rate differences apply, as well as on a report showing a child level in a different currency (e.g. placing a EUR child level on a report and then converting it to CAD).