GBP 1 = USD 1. Therefore, the German subsidiary must adjust its liability to Parent Company A from €6,961,000 to €7,433,000. Direct computation of translation adjustment:Answer. These differences occur from the originating intercompany journal entry and the elimination journal entry. accounting exposure. A cumulative translation adjustment in a translated balance sheet summarizes the gains and losses from varying exchange rates. Exch. A. Changes in reporting currency amounts that result from the translation process are called translation adjustments; translation adjustments are included in the cumulative translation. 71M) (10. Cumulative Translation Adjustment/Unrealized For. Compute the ending Cumulative Translation Adjustment directly, assuming a BOY balance of $105,375. 5654 25,443 Dividends (15,000). The Historical Accounts group contains Historical accounts with a Rate Override or an Amount Override for translation. Assets and Liabilities. Annual balance sheet by MarketWatch. Annual balance sheet by MarketWatch. Prepare a schedule to verify the translation adjustment. What journal entry did the parent company make as a result of this computation? $ Direct computation of translation adjustment: BOY net assets x (EOY - BOY exchange rates) Net income x (EOY - Average exchange rate) Dividends x (EOY -. The cumulative translation adjustment (CTA) is a currency translation adjustment on the balance sheet, reflecting gains and losses caused by exchange rate fluctuations over time. Sts A. Cumulative translation adjustment (CTA) Exchange differences referred to in IAS 21. When a company has foreign operations, the foreign currency cash flows must be translated into the reporting currency using the exchange rates in effect at the time of the. Accumulated other comprehensive income. Year 2's total translation adjustment is $8,000 as of the end of the year. Undeposited Funds. However, the solution does not entirely resolve the problem, but it is a good start. Hedge accounting guidance requires a reporting entity to designate hedging relationships at a transaction. the cumulative translation adjustment. Cumulative Translation Adjustment/Unrealized For. Assets and Liabilities. Chapter 10. Foreign currency translation adjustment (460) (86) (977) (243) Unrealized net loss on marketable securities (5) — (19) — Comprehensive income 2,866 1,573 7,884 3,058 Less: Comprehensive income attributable to noncontrolling interests and redeemable noncontrolling interests in subsidiaries 39 41 11 103Define a “highly inflationary economy according to FASB ASC 830, Foreign Currency Matters. Date recorded: 05 Mar 2010 The IFRIC held an initial discussion on whether the separate foreign currency equity reserve related to the translation of the net assets of an investor's net investment in a subsidiary (often referred to as the cumulative translation adjustment, or 'CTA') should be recycled and if so, when such recycling is appropriate. 0300 0. 50. The cumulative translation adjustment(CTA) for a foreign currency translation adjustmetn arises as the all of the monetary assets (cash, financial assets, etc. translation using the current exchange rate. Changes in the cumulative translation adjustment account are added back in the computation of net cash flow from operating. The elimination entry to distribute the excess will include a(n) debit to Patent for 10,000FC multiplied by the current exchange rate debit to Patent for 10,000FC multiplied by the historical exchange rate credit to Investment in Star for 10,000FC multiplied by the average exchange rate credit to Cumulative Translation Adjustment for 10,000FC. The subsidiary maintains its books in the Australian Dollar (AUD) as its functional currency. If the pattern of cash flows and exchange rates are. 4. Compute the ending cumulative translation adjustment directly, assuming a BOY balance of $(37, 237). Answer. The ASU is intended to resolve diversity in practice about whether Subtopic 810. Translation gain/loss as a component of the net income. Gain. 5. T. Cumulative translation adjustment (CTA) Exchange differences referred to in IAS 21. The British pound is Suffolk's functional currency. earnings Cumulative translation adjustment Total liabilities and equity Statement of cash flows: Net income Change in accounts receivable Change in inventories Change in current liabilities Net cash from operating activities Change in PPEr net Net cash from investing activities Change in long—term debt Dividends Net cash from financing activities Net. Round answers to the nearest dollar. 0300 0. In preparing the consolidation worksheet, the following points must be considered by Felix Toy Company:The December 31,2019 , consolidated balance sheet reported a cumulative translation adjustment with a $41, 950 credit (positive) balance. Exch. 4. Updated June 24, 2022 CTAs, or currency trade adjustments, are ways to identify how changes in exchange rates affect the value of your international purchases. Two ways to control translation risk were presented: a balance sheet hedge and a derivatives “hedge. 50. S. 9 million cumulative translation adjustment in earnings. the foreign subsidiary is about to be liquidated, so that the value of its Cumulative Translation Adjustment (CTA) would be realized; the foreign subsidiary is operating in a hyper inflationary environment ; the firm has debt covenants or bank agreements that state the firm's debt/equity ratio will be maintained within specific limitsCurrency translation – You can set up the account ranges and rates to translate from the accounting currency of the source company to the accounting currency of the consolidation company. FASB Accounting Standards Codification. Many translated example sentences containing "cumulative" – French-English dictionary and search engine for French translations. 52 rule. To our clients and other friends ASC 360-10, Impairment and Disposal of Long-Lived Assets, provides accounting guidance for impairments of assets that are held for use, held for sale and to be disposed of by other means. *BOY net assets calc = BOY RE + APIC + C/S - all in foreign currency balances. Financial Statement Reporting: ASC 830-30-45-13. 39(c) are commonly identified as either ‘Cumulative Translation Adjustment’ (CTA) or ‘Foreign Currency Translation Reserve’ (FCTR). Gain. How must Parentco handle this translation adjustment when it records sale of Subko?Cumulative translation adjustment (CTA) is an accounting entry that reflects the impact of fluctuations in currency exchange rates on a company’s financial statements. 31 October 2016: 0,9005. Nothing passes through the income statement. Compute the cumulative translation adjustment to be reported on December 31, 2020 a. Let’s first start with the basics. This FAQ provides the answers for the most common questions about Balances Translation. The balance sheet risk exposure associated with the current rate method is equal to the foreign subsidiary’s net asset position. Undeposited Funds. It is not reported in current income. It is an entry in a translated balance sheet in which gains and/or losses from translation have been accumulated over a period of time. The cumulative translation adjustment (CTA) for a currency translation adjustment is an entry in the “Accumulated Other Comprehensive Income” section of the translated balance sheet, reflecting gains and losses caused by. 1 January 1985. Related translation adjustments are reported as a component of accumulated other comprehensive income, until such time that the Company substantially liquidates its investment in the foreign operation, at which time the related cumulative translation adjustment is realized through the consolidated statement of operations and. Statement of Accumulated Comprehensive Income:BOY cumulative translation adjustment$197,060Answer [E]Answer. When calculating the first year's translation adjustment, you use the current rate technique to. 1 Unit of account. Cumulative Translation Adjustment Proof. 12T. Assume the U. Note: The Cumulative Translation Adjustment (CTA) account is required for ledgers running translation. This account line is used in consolidated balance sheet and trial balance reports. gc. A highly inflationary economy is best defined as. Assume the same scenario described. Harmony Gold Mining Co. Which of the following statements is true? Net income is multiplied by the difference between the end-of-year exchange rate and the average exchange rate. A cumulative translation adjustment (CTA) summarizes the gains and losses resulting from varying exchange rates over time. Gain (92K) 50K (847K) (17K) 563K. This is a consolidation of various issues faced in this area, and thus provides the tips to resolve them. Realized gains and losses on available-for-sale debt securities . 10,000 . Although ASC 830-30-40-1 and ASC 830-30-45-13 only address the treatment of cumulative translation adjustments, we believe that other amounts in AOCI should be analogized to this guidance (e. Either way, the process is somewhat manual. Net income 45,000. the foreign subsidiary is about to be liquidated, so that the value of its Cumulative Translation Adjustment (CTA) would be realized; the foreign subsidiary is operating in a hyper inflationary environment ; the firm has debt covenants or bank agreements that state the firm's debt/equity ratio will be maintained within specific limitsCurrency translation – You can set up the account ranges and rates to translate from the accounting currency of the source company to the accounting currency of the consolidation company. The subsidiary's financial statements (in AUD) for the prior and most recent years follow in part a. S. 46 4. To see the CTA Balance Audit report: Go to Reports > Financial > CTA Balance Audit. cumulative translation adjustment as a deferred asset. Recall the change in the cumulative translation adjustment is equivalent to the translation gain/loss for the period. This would result in the investor deconsolidating a portion or all of its foreign operations. One journal line is the Accounting Setup Manager defined Cumulative Translation Adjustment Account (CTA) which is offset by the proper Gain/Loss account as seen in the primary journal ledger. 2m in positive cumulative translation adjustment. This calculation is shown in Exhibit E. 4. On a partial disposal of a foreign operation, an entity is required to reclassify to profit or loss the proportionate share of the Net investment hedge amounts that are included in the assessment of hedge effectiveness are recorded in OCI as a part of the cumulative translation adjustment. 2. The unit of account in ASC 815 is generally the individual derivative. The entry on Line 23a should allow the IRS to differentiate between the actual day-to-day operational gains and losses and those caused due to foreign currency translation. The tax effect of cumulative translation adjustments would be allocated specifically to other comprehensive income, whereas the tax effect of a tax rate change for the current year would be reflected in continuing operations. The investor records a corresponding proportionate increase or decrease in its equity method investment for an increase or decrease in OCI (ASC 323-10-35-18). 3 billion in 2005 and a positive $3. 31B) (4. Cumulative translation adjustment 900 Property, plant & equipment (revaluation) 900 To revalue (write-down) the excess of acquisition consideration over book value for the change in exchange rate since the date of acquisition with the counterpart recognized in the consolidated cumulative translation adjustment. Fiscal year is October-September. The Cumulative Translation Adjustment (CTA) is an entry in the accumulated other comprehensive income section of a balance sheet (translated into the reporting currency), in which gains and/or losses from FX translation have been accumulated over a period of years. Income Statement Stability: Because the current rate method applies the cumulative translation adjustment to the equity section of the parent's balance sheet, the consolidated net income will be less volatile, when compared to translation under the temporal method. Solution. Accounting questions and answers. When a company has foreign operations, the foreign currency cash flows must be translated into the reporting currency using the exchange rates in effect at the time of the. during the translation process, the current year change to the cumulative translation adjustment is a function of which of the following relationships of the subsidiary. The CTA (Cumulative Translation Adjustment) GL Account is used as a plug to balance the Trial Balance after translating using various exchange rates. g. 5. A. Earnings per share (EPS. If a subsidiary is operating in a highly inflationary economy, how are the financial statements restated?. BOY net assets x (EOY - BOY exchange rates) BOY net assets x BOY exchange rate. Compute the ending Cumulative Translation Adjustment directly, assuming a BOY balance of $115,375. The December 31,2019 , consolidated balance sheet reported a cumulative translation adjustment with a $61, 950 credit (positive) balance. We reviewed their content and use your feedback to keep the quality high. In addition, entities should include an analysis of changes in cumulative. NetSuite calculates CTA through consolidation and translation. Click the card to flip 👆. 50,775 debit. The exception would be income statements. The FASB has issued ASU 2013-05 titled Foreign Currency Matters (Topic 830) - Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity. All values USD Millions. It is an entry in a translated balance sheet in which gains and/or losses from translation have been accumulated over a period of time. 775 debit d. B. Often, the. ). Other. Once the cumulative translation adjustment is calculated we can complete the translation of the balance sheet for the U. d) Cumulative translation adjustment as a deferred asset. The current rate method must be used when the foreign currency is chosen as the functional currency. EOY cumulative translation adjustment372,922Answer. Cash: $1,526,569: Answer Answer Accounts receivable: 1,768,320: Answer Answer. 532131,927 Cumulative translation adjustment (debit) (2,762) 13 - 2Temporal Method: The temporal method (also known as the historical method) is a method of foreign currency translation that uses exchange rates based on the time assets and liabilities are. 68M) 3. Annual balance sheet by MarketWatch. Parent reports a cumulative translation adjustment using the equity method. All gains or losses from translation are reported as a cumulative translation adjustment to. Exposure Draft E44 The Effects of Changes in Foreign Exchange Rates. The disclosures required by (b) and (d) shall exclude cumulative basis adjustments related to foreign exchange risk. 1. , Translation exposure refers to Multiple. 3 Disposition of. If you open the report from the menu, be sure a consolidated subsidiary is selected in the Subsidiary. The cumulative translation adjustment is typically recorded as part of profit or loss. The applicable exchange rates GBP/EUR: 31 December 2015: 0,7340. 4. dollar–translated balance sheet reported retained earnings of $162,250 and a cumulative translation adjustment of $9,650 (credit balance). 9M) (6. You are able to essentially create a Balance Sheet. Adjustments can occur over the course of multiple accounting periods, as for. Oracle FCCS allows companies to deliver financial and non-financial data to all stakeholders with precision and reliability. and net liabilities denominated in the same B. What method would the accountant have used. Ltd. The cumulative translation adjustment is typically recorded as part of equity. Please review the CTA Article, this will inform this example. Remeasurement Translation D. The subsidiary's beginning (1/1/20) retained earnings and cumulative translation adjustment (credit) in dollars were $75,948 and $36,462, respectively. 00 which exchanges to 8,000 and after that it needs to add Net income, Year 1 of 1,400 to multiply by $0. This line appears with other equity account type lines within the report. 51,775 credit b. When the initial accounting for a business combination is not complete by the end of that reporting period, the acquirer reports provisional amounts for any incomplete items. The subsidiary’s financial statements (in BRL) for the most recent year: PLEASE SOLVE FOR A AND B. The ICAEW Library stocks the latest UK GAAP handbooks and manuals. C. B. This is the ‘CTA’ required to make the Balance Sheet remain in balance – because: We converted the Assets & Liabilities on Figure 6 at the using the Current FX Rate prevailing at the end of February. 4. IAS 21 (1983) was revised as part of the comparability of financial statements project. One of the key features of Oracle FCCS is the built-in balance sheet movement translations with FX/Cumulative Translation Adjustments (CTA) Calculations. All-Inclusive Income Concept: Meaning, Criticism, History. The foreign currency translation adjustment or the cumulative translation adjustment (CTA) compiles all the fluctuations caused by varying exchange rate. Net income x (EOY - Average. . It is recognized under the shareholder’s. You can browse all our books on FRS 102 and foreign currency or request any of the following popular titles by contacting us on +44 (0)20 7920 8620, by web chat, or at library@icaew. The subsidiary maintains its books in the British pound (GBP) as its functional currency. Translate using the current exchange rate at the balance sheet date for assets and liabilities. While the CTA can be positive or negative, it is generally considered a non-cash item that does not impact a company’s cash flow. For example, a user must first run the elimination process so that NetSuite creates an elimination journal entry that uses this account. Gain (12. Confirm the balance of the Equity Investment account of $4,139,188 on the. b. operation. -2,945 or parentheses e. The cumulative translation adjustment computation contains an adjustment to reflect changes in the fair value of the net assets of the company. If you open the report from the menu, be sure a consolidated subsidiary is selected in the Subsidiary. 2 and later: How is the Cumulative Translation Adjustment (CTA) Account Calculated. 50. When you run elimination, NetSuite posts elimination journal entries. Direct computation of translation adjustment: BOY net assets x (EOY - BOY exchange + v $ O X Net income x (EOY - Average exchange rate) 16,800 V Dividends x (EOY - Dividend exchange + (840). S. CTA stands for Cumulative Translation Adjustment or Currency Translation Adjustment. A CTA entry is required under the Financial Accounting Standards Board. When a foreign currency is the functional currency, foreign currency balances are translated using the current rate method and a cumulative translation adjustment is reported on the_______________ _________. It is an entry in the accumulated other comprehensive income section of a. D. The foreign subsidiary is operating is a hyperinflationary environment. Cumulative Translation Adjustment (CTA) account. 406 Exam 3. 2022 2021 2020 2019 2018 5-year trend; Net Income before Extraordinaries----- This is referred to as the translation adjustment and is reported in the statement of other comprehensive income with the cumulative effect reported in equity, as other comprehensive income. Pension and other postretirement benefits items amortized into net income . Addition to the cumulative translation adjustment. Fiscal year is October-September. The subsidiary maintains its books in the British pound (GBP) as its functional currency. 13 – 1. 6. This section lists solutions for common consolidation issues such as retained earnings not rolling over for a period, Cumulative Translation Adjustment (CTA) not being calculated, opening balance and foreign exchange calculation inaccuracies, and custom member formulas being defined under Total Balance Sheet. . The intraperiod allocation rules can get quite complex and yield some very nonintuitive results. 2. Accounting questions and answers. This FAQ document is aimed at providing troubleshooting guidelines for Balances Translation related functionality. 60 = P1,470,300o =====830): Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity. The CFO is unsure whether the cumulative translation adjustment should be removed from equity, and if so, to what other account it should be transferred. The cumulative translation adjustment(CTA) for a foreign currency translation adjustmetn arises as the all of the monetary assets (cash, financial assets,. Sales are made and all expenses are incurred uniformly throughout the year. The effect of changes in exchange rates between the foreign entity’s functional currency and the reporting currency is recognized in the reporting entity’s. 07B) (1. 85M) Unrealized Gain/Loss Marketable Securities. 52 rule. From my experience, in the HFM world equity translation is most commonly handled through a set of so-called “override”. Find your RI that balances your Balance Sheet. . Question #3: What is the annual change in the translation adjustment for Year 2? Question #4: What is the cumulative translation adjustment at the end of Year 2? Exercise 12-13 Year 1 Rupees Dollars Year 1 Debits Cash Receivables Inventory Fixed Assets 100,000 450,000 680,000 1,000,000 0. Year-to-date net loss reaches €4. Enter loss and debit cumulative translation adjustment using either a negative sign preceding the number e. Cumulative Translation Adjustment Proof. 09 = 0. Subsidiary's cumulative translation adjustment is not carried forward to the consolidated balance sheet. All plant assets were acquired before the parent obtained a controlling interest in the subsidiary. Which of the following statements is true? Net income is multiplied by the difference between the end-of-year exchange rate and the average exchange rate. Foreign currency translation–This is the process of expressing a foreign entity’s functional currency financial statements in the reporting currency. Payment is due on January 31, 2014. The financial statements of many companies now contain this balance sheet plug. 0300 0. Therefore, the German subsidiary must adjust its liability to Parent Company A from €6,961,000 to €7,433,000. An entity that has committed to a plan that will cause the cumulative translation adjustment for an equity method investment or a consolidated investment in a foreign entity to be reclassified to earnings shall include the cumulative translation adjustment as part of the carrying amount of the investment when evaluating that investment for impairment. 0300 0. Where is the translation adjustment reported in the parent company's financial statements? MULTIPE CHOICE. A . To see the CTA Balance Audit report: Go to Reports > Financial > CTA Balance Audit. 14B) Unrealized Gain/Loss Marketable. The unit of account in ASC 815 is generally the individual derivative. Ending RI - Beginning RI + Dividends). S. The translation adjustment does not have any impact on net income. Cumulative translation adjustment, before income taxes (1 ) 26 (22 ) 26 Income taxes related to items of other comprehensive income - - - - Other comprehensive income (loss), net of tax. The translation adjustment is an inherent result of this process, in which balance sheet and income statement items are translated at. SIC-19 Reporting. 3% on Thursday and 13. 25 The December 31, 2019, consolidated balance sheet reported a cumulative translation adjustment with a $46,950 credit (positive) balance. The foreign currency translation adjustment, also known as the cumulative translation adjustment CTA, aggregates all of the changes produced by fluctuating exchange rates. Exch. -The cumulative translation adjustment reflects changes in the fair values of marketable securities on the balance sheet. Monetary assets and liabilities (those whose value does not fluctuate over time - cash, receivables, payables) Translated at the current exchange rate Nonmonetary assets and liabilities and stockholders' equity accounts (those whose value does fluctuate over time - inventory, investments, fixed assets, etc. ). See Answer See Answer See Answer done loadingThat is your Cumulative Translation Adjustment. The resulting exchange gains or losses are recognized in a separate component of equity called the cumulative translation adjustment. Cumulative Translation Adjustment-Elimination. The difference between the consolidated historical carrying values (which would have been a function of the exchange rate that existed when the assets or liabilities arose), and the new translated values using the current exchange rate, is recorded to the cumulative translation adjustment (CTA) account. IFRIC 16 Hedge of a Net Investment in a Foreign Operation; IFRIC 22 Foreign Currency Transactions and Advance Consideration; SIC-30 Reporting Currency – Translation from Measurement Currency to Presentation Currency. Compute the cumulative translation adjustment to be reported on December 31, 2020 a. How is this figure computed, and where is the amount reported in the financial statements? Click the card to flip 👆. P1,006, On October 31, 2013, Pyramid Philippines took delivery from a British firm of inventory costing £725,000. Any differences arising out of translation for Balance sheet accounts and P&L accounts owing to a difference in average rate and period end rates will be posted to this particular account. However, in this example the currency translation will still take place even though we have for amount in group currency coming from ACDOCA. the change in the value of a foreign subsidiaries assets and liabilities denominated in a foreign currency, as a result of exchange rate change fluctuations, when viewed from the. (Round answers to 0 decimal places, e. The difference between these rates is captured within the Cumulative Translation Adjustment account. While executing the release universal journal task in SAP S/4HANA Finance for group reporting system will update the column for amount in group currency. Gain. Cumulative Translation Adjustment (CTA) account. 1 Cumulative translation adjustment in impairment tests. Do not round your answers for part b. Change in exchange rate. Study with Quizlet and memorize flashcards containing terms like Where is the translation adjustment reported in the parent company's financial statements? A. 1. Other. If the process of converting the financial statements of a foreign entity into the reporting currency of the parent company results in a translation adjustment, report the related profit or loss in other comprehensive income. However, as was the. Process eliminations in a consolidated or elimination company – You can process and post eliminations as a single process during consolidation. E. There are multiple SuiteAnswers articles on this. Oracle’s Financial and Consolidation Close (FCC) application offers out-of-the-box CTA calculation to help ease the pain. Has anyone figured out how to get the details behind this amount off of the consolidated balance sheet? Looking to get a report or some visibility into how the cta is calculated. The translation adjustment from translating a foreign subsidiary's financial statements should be shown as. If the foreign currency is the functional currency, gains and losses on hedging instruments will be taken to other comprehensive income. 6% the past 2 days ; 6:28a SolarEdge stock price target cut to $140 from $176 at TD CowenFiscal year is January-December. A. 73 137,970 Dividends paid -18,900 0. Net. Create Two. Net assets, beginning of year. Cumulative Translation Adjustment/Unrealized For. Unrealized Gain/Loss Marketable Securities-Option not to recognize any cumulative translation adjustment for foreign subsidiaries. Find out the treatment of CTA for noncontrolling interests and equity method investments, and the difference from FX gains and losses. Net loss in the income statement. Expert-verified. Gain-----Unrealized Gain/Loss Marketable Securities. The foreign subsidiary is operating is 16. Related: How To Become an International Trade Specialist. S. The CTA account captures the difference between these two exchange rates in US$. Also check out the blog on prolecto. CTA is a special account that is required for consolidated balance sheets in NetSuite OneWorld accounts with multi-currency enabled. In addition to the disclosures examples provided in this installation, the GAAP Financial Statement Disclosures Manual alsoCumulative translation adjustment : 1,345 (1,027) Net loss and comprehensive loss for the period $ (8,859) $ (7,402) Loss per common share : Equity holders of the Company : Basic and diluted net loss per common share (note 13) $ (0. View all THC assets, cash, debt, liabilities, shareholder equity and investments. 0300 0. Example 1: The tax effect of cumulative translation adjustments would be allocated specifically to other comprehensive income, whereas the tax effect of a tax rate. Cumulative translation adjustment – debit (2,000,000) Problem 7-Share capital 6,000, Share premium 3,500, Cumulative translation adjustment – debit 2,000, Treasury shares, at cost 700, Retained earnings 1,500, Designated as cash flow hedge 600, Cumulative unrealized gain on option contract;Palmerstown 8 a larger number when reported in dollars. 14B) (1. BOY net assets x (EOY - BOY exchange rates) BOY net assets x BOY exchange rate. For NetSuite OneWorld, consolidated balance sheet reports use a special account called Cumulative Translation Adjustment (CTA) to achieve balance when there is more than one currency. (Input all answers as positive. Converting the language. You can run intercompany elimination for a period multiple times, as needed. 2 Analysis of changes in cumulative translation adjustment. 19 -417,690 Net in. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. CTA is a special account that is required for consolidated balance sheets in NetSuite OneWorld accounts with multi-currency enabled. 1 Overview Financial reporting developments Foreign currency matters | 2 The first step in the translation process is to identify the functional currency (refer to section 2. Foreign currency translation–This is the process of expressing a foreign entity’s functional currency financial statements in the reporting currency. com. 6M) (6. 10) $ (0. Cumulative Translation Adjustment-Elimination. e) Accumulated other comprehensive income.