Example Use of CTA in Balance Sheet

In the sample hierarchy below, you are rolling up the balances from the UK into the US consolidated parent. The appropriate consolidated exchange rate for each account is used to roll up the balances into U.S. dollars.

The balance sheet always balances in the local currency, as shown in the last line of the previous table. However, because the consolidated rates for equity and retained earnings are different than those for assets and liabilities, the consolidated balance sheet may not balance. The CTA equals the amount that is required to balance the consolidated balance sheet. In this example, the CTA is ($100).