Free tool
Currency translation and CTA calculator
Translate a foreign subsidiary into your reporting currency under the current rate method, and see exactly where the Currency Translation Adjustment comes from.
- No sign-up
- Runs in your browser
- Every step shown
- CSV download
Translated into USD
- Translated net income (USD)
- Translated equity (USD)
- Currency Translation Adjustment
-
Translate the P&L month by month
Each month's revenue and expenses are divided by that month's average rate. Brackets are costs and losses.
Monthly profit and loss in both currencies Month Revenue INR Expenses INR Net income INR Avg rate Revenue USD Expenses USD Net income USD -
Translate assets and liabilities at the closing rate
Everything the subsidiary owns and owes is translated at the rate on the balance sheet date.
Assets and liabilities at the closing rate Line INR Rate USD -
Translate equity at historical rates
Opening equity stays at the rate when it arose. This period's profit joins it at the monthly average rates from step 1.
Equity at historical and average rates Line INR Rate USD -
The CTA balances it
Net assets are at today's rate but equity is at older rates, so the two no longer agree. The Currency Translation Adjustment is the difference, shown in equity (other comprehensive income).
Where it comes from
The CTA split into the effect on opening equity and on net income Amount moved to the closing rate Effect (USD) -
Translated balance sheet
With the CTA in equity, assets equal liabilities plus equity in USD too.
Translated balance sheet summary Line USD
The method
The current rate method, in plain words.
When a subsidiary keeps its books in another currency, its figures are translated before they're added to the group. The current rate method is how IAS 21, Ind AS 21 and US GAAP (ASC 830) translate a foreign operation that keeps its own currency:
- Income and expenses are translated at the rates on the dates they happened. A monthly average is the usual stand-in, so each month uses its own average.
- Assets and liabilities are translated at the closing rate on the balance sheet date.
- Share capital and reserves stay at the historical rates when they arose.
- Because the balance sheet and equity use different rates, they don't agree. The difference is the Currency Translation Adjustment, held in equity until the subsidiary is sold.
In the example the rupee weakens from 83.00 to 90.80 per dollar. The Indian company's net assets are worth fewer dollars than when they were built up, so the CTA is negative. A strengthening currency gives a positive one.
This calculator leaves out dividends and new capital during the period; each would be translated at the rate on the day it happened.
Illustrative only. This is a simplified model for learning and checking. It isn't accounting or tax advice, and the example figures and exchange rates are made up. Agree your group's translation policy with your accountant or auditor.
Every month translated, every month balanced.
Connect subsidiaries that keep their books in other currencies and report the group in INR, USD, GBP, SGD, EUR or CAD. Each company gets 90 days free from signup (first 100 signups, with 100 AI credits).