Foreign exchange (FX) revaluation adjusts your GL account balances to reflect current exchange rates. In Light, FX revaluation is a required step in the period-end close process and is run on a per-en...
Last updated Jul 22, 2026 · 12 min read
Light maintains a three-tier currency model on every ledger transaction line:
| Tier | What it is | Set at |
|---|---|---|
| Transaction currency | The currency a document was actually transacted in (e.g. a USD vendor bill). Present only when it differs from the local currency. | Per document |
| Local (functional) currency | The functional currency of the legal entity. | Per entity (cannot be changed after the entity is created) |
| Group (presentation) currency | The reporting currency used for consolidation. | Per company (group) |
Every posted line stores its amount in all three currencies at the same time — local and group are always populated, transaction currency where applicable — together with the debit/credit sign. This means the functional-currency and group-currency view of each transaction is fixed and auditable at the moment it posts.
FX revaluation addresses the mismatch between when a transaction is recorded and when it settles.
Example:
FX revaluation entries record this unrealized gain or loss and adjust GL balances to reflect current exchange rates at period-end.
Light sources exchange rates from two providers:
How rates are stored and resolved:
You can override system rates instead of using market rates:
For setting your own rates, see Setting a Custom FX Rate for Your Company and When Custom Rates Apply vs System Rates.
Light assigns each ledger account an exchange-rate type derived automatically from the account's classification. This is the key control behind which balances move at period-end:
| Account classification | Rate applied | Re-translated each period? |
|---|---|---|
| Asset, Liability | End-of-month (closing) rate | Yes — through period-end revaluation |
| Equity | Historical rate | No — locked at the original posting rate |
| Revenue, Expense | Historical rate (transaction date) | No — locked at the original posting rate |
This implements the standard monetary / non-monetary distinction: monetary balance-sheet items are carried at the closing rate, while equity and income-statement items are held at the historical rate at which they were recognized. The difference that arises between closing-rate balance-sheet items and historical-rate equity/P&L is captured as the cumulative translation adjustment (see below).
Note on income and expenses: Light translates income and expenses at the actual transaction-date (spot) rate of each item, not at a period-average rate. Under IAS 21 this is the preferred basis — the standard requires the spot rate at the date of each transaction (IAS 21.21) and only permits a period-average rate as a practical approximation, which is inappropriate when rates fluctuate significantly (IAS 21.22; IAS 21.40 for translation to the presentation currency). Light applies the actual rate per item, so it is more precise than an average-rate method rather than a deviation from it; auditors expecting average-rate P&L translation should simply note the difference in approach.
A revaluation is defined by two things: which balances are revalued (the population) and which currency layer the difference lands in (the dimension). Light keeps these separate.
Open or partially-cleared payable and receivable documents, plus released accrual lines that are still open at period end. These are revalued per document or accrual line at the period-end closing rate, with a link back to the source invoice/line for traceability. Documents that were fully cleared during the period are also included in the run — this is how prior periods' unrealized revaluations on those documents are reversed once the gain or loss has become realized at clearing.
Balance-sheet accounts you set to revalue — bank, cash, and other monetary accounts. These are revalued per account and currency at the closing rate, based on the account's open foreign-currency balance.
The transaction → local dimension. Light brings the open foreign-currency balance to the period-end closing rate in the entity's functional (local) currency and posts the offset to the unrealized FX gain/loss account. This is the gain or loss that appears in the entity's own books. It is controlled per account by the Entity revaluation settings dropdown described below.
The local → group dimension. Light re-translates the local-currency balance to the group (presentation) currency at the closing rate and posts the offset to the CTA account. On a CTA posting the local-currency amount is nil — by design it adjusts only the group-currency balance, because it represents the translation-only difference between functional and presentation currency. It is controlled per account by the Group revaluation settings dropdown; an account set to Historical generates no CTA.
Each ledger account has an FX settings section with two dropdowns that control how the account behaves at period-end. Set them when creating or editing an account in Accounting → Chart of accounts:
| Setting | Options | What it does |
|---|---|---|
| Entity revaluation settings | Do not revalue / Revalue for entity | Revalue for entity revalues the account's open foreign-currency balances into the entity's functional (local) currency at period-end, posting unrealized FX gain/loss. Do not revalue leaves the balance at its booked local amount. |
| Group revaluation settings | End of period / Historical | End of period carries the account at the closing (end-of-period) rate and generates CTA on the local→group difference. Historical keeps it at the original posting rate, so no CTA is posted. |
To configure an account:
Typical settings by account type (these follow the account classification described above):
When a document is posted, Light fetches the rates effective on the posting date and computes the amounts for every line:
These amounts are persisted on the line, and the source of each rate (system, company override, entity override, or document override) is recorded — giving a complete audit trail of the rate applied to every posting.
Realized FX gains and losses are recognized when an open foreign-currency item (such as an AP or AR invoice) is cleared or settled. Light computes the difference between:
and posts the difference to the system FX gain / FX loss accounts — recognized in profit or loss per IAS 21.28. Where the local-to-group conversion also differs, the group-only component is posted to the CTA account. Sub-unit rounding differences arising from the three-currency conversion are isolated to a dedicated rounding account, so the double entry stays balanced in all three currencies.
Example:
The total P&L impact across periods combines unrealized and realized gains/losses.
Period-end revaluation is run as a controlled accounting-period close task — not an ad-hoc process. Each accounting period has a set of required tasks that must be completed before the period can be closed:
Controls and sequencing:
The run covers the open items and monetary accounts described under What gets revalued above — open AP/AR documents and accruals, plus any account whose Entity revaluation settings is Revalue for entity. Each open balance is taken at the period-end closing rate, and for any account whose Group revaluation settings is End of period the local→group difference is posted to CTA.
For each population, Light revalues the open foreign-currency balance at the period-end closing rate and compares it to the amount currently on the books:
Revalued balance = open balance (original currency) × period-end rate
FX adjustment = Revalued balance − current carrying amount
Revaluation runs are idempotent (protected against duplicate posting) and can be archived or reversed through a controlled reversal that reverses the underlying accounting document. The full history of revaluation documents is retained.
To run FX revaluation for a period:
Light calculates the unrealized FX gains and losses for the selected entities and creates the corresponding accounting document automatically. You can view the resulting entries on the page, linked to the accounting period in which the revaluation was run.
After posting, the Document revaluation section of the FX revaluation dialog shows the revaluations that have been posted for the period. You can review these at any time by:
The Last run column in the entities list shows the date of the most recent revaluation for each entity.
If an FX revaluation task has already been completed for a period, the action button changes from Run revaluations to Reopen. Reopening marks the task (and any dependent tasks) as no longer completed so you can re-run the revaluation if adjustments are needed — it does not by itself reverse the posted entries. To back out a posted revaluation, archive the individual FX revaluation document; archiving reverses the underlying accounting document through a controlled reversal. Because a re-run takes previously posted revaluations into account, it will not double-post, and the history of revaluation documents is retained for audit.
If you have multiple legal entities in Light, each entity is revalued independently. The FX revaluation dialog lists all your entities with checkboxes, so you can:
CTA captures the difference that arises because asset and liability accounts are re-translated to the closing rate each period (their Group revaluation settings is End of period), while equity and accumulated P&L stay at historical rates. The net imbalance posts to the system Currency Translation Adjustment account — recognized in other comprehensive income and accumulated in a separate component of equity (IAS 21.39(c) and 41) — and, as described under Group FX above, it adjusts only the group-currency balance (the local amount is nil).
CTA is generated in two places:
Consolidation is produced as a report-time computation, not as posted consolidation journals. Each entity's results are translated and aggregated into the group presentation currency and summed:
A consolidated report may be presented in local currency only if all in-scope entities share the same functional currency; otherwise it must be presented in the group base currency, which always works across mixed-currency entities. By default consolidation covers all entities in the group (or an explicitly selected set), summed on a flat basis. See Multi-currency consolidation for details.
| Area | Treatment in Light | IAS 21 reference | ASC 830 reference | Assessment |
|---|---|---|---|---|
| Monetary assets & liabilities | Closing (end-of-month) rate, revalued each period | IAS 21.23(a) | ASC 830-20-35; 830-30-45-3 | Best practice |
| Equity | Historical rate, not re-translated | IAS 21.23(b) | ASC 830-30-45 | Best practice |
| Income statement | Transaction-date (spot) rate per item | IAS 21.21–22; 39(b), 40 | ASC 830-30-45-3 | Best practice |
| Translation difference | Posted to CTA (group-only) | IAS 21.32, 39(c), 41 | ASC 830-30-45-12 to 45-20 | Best practice |
| Realized FX on settlement | FX gain/loss vs. original rate | IAS 21.28 | ASC 830-20-35-1 to 35-2 | Best practice |
| Consolidation translation | Report-time aggregation in group currency | IAS 21.38–39, 44–46 | ASC 830-30; disposal ASC 830-30-40-1 | Best practice |
The Assessment is the same under both frameworks. Paragraph references are to IAS 21 The Effects of Changes in Foreign Exchange Rates and ASC 830 Foreign Currency Matters. Under ASC 830, the transaction-to-functional layer is a remeasurement (transaction gains/losses recognized in net income, ASC 830-20) and the functional-to-presentation layer is a translation (CTA reported in other comprehensive income, ASC 830-30). On the sale or substantially complete liquidation of a foreign entity, the accumulated CTA is reclassified from equity to net income (ASC 830-30-40-1, as clarified by ASU 2013-05).
Tax considerations: Some jurisdictions tax only realized FX gains/losses, and unrealized losses may not be deductible. Consult your tax advisor on the treatment of revaluation entries.
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