Cumulative Translation Adjustment - CTA

What is a 'Cumulative Translation Adjustment - CTA'

A cumulative translation adjustment (CTA) is an entry in the comprehensive income section of a translated balance sheet summarizing the gains/losses resulting from varying exchange rates over the years. A CTA entry is required under the Financial Accounting Standards Board (FASB) No.52 rule as a means of helping investors differentiate between actual operating gains/losses and those generated via translation.

BREAKING DOWN 'Cumulative Translation Adjustment - CTA'

By knowing what a company has earned or lost through its day-to-day business operations, rather than from an accounting practice, investors are better able to make sound financial decisions. Cumulative Translation Adjustments are an integral part of the financial statements for firms with international market exposure.

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