Currency Translation Adjustment (CTA)

Problem

gold_fx_revaluation has cta_amount = 0 (placeholder). CTA is required under IFRS (IAS 21) and US GAAP (ASC 830) to keep the balance sheet balanced after translation.

Depends On

FX Translation (separate closing and average rates must exist in consolidated TB)

What is CTA?

When you translate a foreign subsidiary:

• BS at closing rate → net assets change period to period due to FX movement
• P&L at average rate → income doesn't translate at the same rate as BS
• CTA = the plug that makes Assets - Liabilities = Equity + Income + CTA

Formula

For each entity/period:

CTA = (BS_net_at_closing - BS_net_at_prior_closing) - PnL_net_at_average

Simplified per-period:

CTA = sum(BS items × closing_rate) - sum(BS items × prior_closing_rate)
      - sum(PnL items × average_rate) + sum(PnL items × closing_rate)

Or equivalently:

CTA = sum(PnL items × (closing_rate - average_rate))
      + sum(BS opening × (closing_rate - prior_closing_rate))

Requirements

R1: Prior period closing rate

• Model must look up the prior period's closing rate for each currency pair
• Period 1 uses historical/opening rate (or closing from prior year period 12)

R2: CTA line generation

• One CTA row per: consolidation_group, data_area_id, fiscal_year, fiscal_period
• adjustment_type = 'CTA'
• cta_amount = calculated per formula above
• main_account = 'CTA' (reserved account code for equity adjustment)

R3: CTA flows into consolidated output

• CTA entries must be addable to consolidated TB so that group BS balances

Acceptance Tests

Test	Assertion
assert_cta_not_zero_when_rates_differ	When closing_rate ≠ average_rate, CTA ≠ 0 for that entity/period
assert_consolidated_bs_balances_with_cta	sum(BS group_amount) + sum(CTA) = sum(Equity group_amount + PnL group_amount) (or net = 0 within tolerance)
assert_cta_zero_for_same_currency	When entity currency = reporting currency, CTA = 0

Out of Scope

• Goodwill CTA (no acquisition accounting)
• Recycling CTA to P&L on disposal