The system can automatically calculate Currency Translation Adjustment (CTA) for all temporary differences. The calculation takes into account the differences between the Weighted Average FX Rate, Beginning Deferred FX Rate, and Ending Deferred FX Rate. It can also, if applicable, take into account any differences in Unit Tax Rates that have a foreign exchange impact.

 

CTA amounts can be viewed in three different reports: Tax Provision, Deferred Balances (cir expanded b/s), and Deferred Balances (expanded i/s), which is the most comprehensive report. The Tax Provision report displays the total CTA amount, while the Deferred Balances (cir expanded b/s) report only displays the CTA for the Beginning Balance. The Deferred Balances (expanded i/s) report, however, displays CTA on Activity, differences between beginning and ending tax rates, differences between current and deferred tax rates, and Deferred Only Adjustments.

 

There are three options for calculating CTA:

•The first computes the CTA and impacts the Ending Payable accounts. The CTA is offset in an Equity account. The Ending Deferred Tax Asset/Liability accounts are then offset in an Equity account.

•The second (Alternative CTA - International Financial Reporting Standards: IFRS) computes the current Tax Expense, which is offset in a Taxes Payable account. The Deferred Tax Expense is offset in the Ending Deferred Tax Asset/Liability accounts.

•The third (Additional CTA) allows you to manually calculate and enter additional CTA amounts. The entry is in the Reporting Currency and After Tax Rate format. Depending on which fields are populated, the amounts could impact both Current and Deferred Tax Expense, Deferred Only Tax Expense, or Equity. Amounts are tracked and shown on reports with a system-defined After Tax Temporary Difference.