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Foreign Currency translation is the process that restates functional currency account balances
in another currency.
Translation converts balances from your functional currency to a foreign currency, you can
translate both actual and budget balances. if you have average balance processing enabled the
system can translate average balances as well.
Tranlation is frequently used to prepare financial reports for consolidation into global financial
statements. It is also used in highly inflationary economies to produce reports in a more stable
currency.
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When do you run translation:
Translation should be run at the end of the period, after all transactions have been processed and
reconciled.
How do I check that the translation has been carried out correctly?
Reconciliation of the Cumulative Translation Adjustment (CTA) Account:
1.Take the total of your P&L (Revenue and Expense) accounts and multiply this amount by the
period average rate defined.
2.Take the total of assets and liabilities and multiply this amount by the period end rate.
3.Take the total of your retained earnings and use the historical amount or multiply by historical
rate (whichever way you have defined it).
4.Add 1,2 and 3 together. This should equal the amount in your translation adjustment account.
5.Make sure no other entries have been made to the account. If there has been, they would have
to be reversed in order to reconcile the amount.