By Lisa Wallace
FASB’s Emerging Issues Task Force Issue No. 11-A, “Parent’s Accounting for the Cumulative Translation Adjustment (CTA) upon the Sale or Transfer of a Group of Assets within a Foreign Subsidiary That Meets the Definition of a Business”, considers conflicting guidance on this issue. Topic 830, Foreign Currency Matters, states that CTA is recognized in earnings only when the foreign subsidiary is completely or substantially liquidated. However, Topic 810, Consolidation, provides that when a group of assets meeting the definition of a business under Topic 805 is sold, that a portion of the CTA associated with that group of assets should be recognized in earnings. This issue is currently on the Agenda for the November 3rd meeting.
