Hi
Scenario:
An Australian subsidiary (Sub A) transfers inventory to a US subsidiary (Sub B).
Sub A ships on August 15 (decrease in inventory)
Dr Inventory in Transit $1,000 AUD
Cr Inventory $1,000 AUD.
Sub B receives on September 15 (increase in inventory)
Dr Inventory $500 USD
Cr Intercompany Clearing, $500 USD
Sub A (to clear inventory in transit):
Dr Intercompany Clearing $1,000 AUD
Cr Inventory in Transit $1,000 AUD
The exchange rate on September 15th is 1 AUD=0.5 USD
On 30th September, the exchange rate is 1 AUD=0.4 USD
The parent Subsidiary (Sub G) has a presentation currency of AUD.
On consolidation, the intercompany clearing account will translate to:
$1,000 AUD Debit (from sub A)
+($1,250) AUD Credit (from sub B)
= ($250) AUD Credit on consolidation at the end of the month
Note: There is no sale or purchase between the subsidiaries. This is purely an inventory ownership transfer.
With that being the case, should NetSuite post the $250 AUD into the cumulative translation adjustment (CTA) account?
Thanks
