#Understanding FX Revaluation
FX revaluation addresses the mismatch between when a transaction is recorded and when it settles.
Example:
- You invoice an AR customer for 100,000 EUR on January 1 at a rate of 1.20 USD/EUR = 120,000 USD
- You post 120,000 USD to your receivable in the GL
- By January 31 (period-end), the rate has moved to 1.18 USD/EUR
- The receivable is now worth 118,000 USD at the new rate
- Unrealized loss: 120,000 - 118,000 = 2,000 USD
FX revaluation entries record this unrealized gain or loss and adjust GL balances to reflect current exchange rates at period-end.
#Which Accounts Revalue?
Revaluation applies to accounts that hold foreign currency balances that have not yet settled.
Accounts that typically revalue:
- Accounts Receivable (in foreign currency)
- Accounts Payable (in foreign currency)
- Cash in foreign currency
- Intercompany payables/receivables
- Forward contracts
Accounts that typically don't revalue:
- Fixed assets (valued at historical rate)
- Long-term debt (under hedge accounting, may be valued at spot)
#FX Revaluation in the Period-End Close
In Light, FX revaluation is part of the . Each accounting period has a set of required tasks that must be completed before the period can be closed:
- Account Payables — Close AP for the period
- Account Receivables — Close AR for the period
- Journal Entries — Close journal entries for the period
- FX revaluation — Run and post FX revaluation entries
All four tasks are marked Required. The order they appear may vary by period, but all must be completed before you can close the period.
Note: The prior accounting period must be closed before you can complete tasks in the current period.
#Running FX Revaluation
To run FX revaluation for a period:
- Go to Accounting > Accounting periods in the sidebar ()
- Expand the relevant year and click on the period you want to close (e.g., May 2024)
- On the Tasks page, find the FX revaluation row and click Run revaluations
- The FX revaluation dialog opens with two sections:
- Entities to close — A list of your entities (legal entities) with checkboxes and a Last run column showing when revaluation was last posted for each entity
- Document revaluation — Shows any revaluations that have already been posted for this period
- Select the entities you want to revalue by checking their checkboxes
- Click Post revaluation
Light will calculate the unrealized FX gains and losses for the selected entities and create the corresponding journal entries automatically. You can view these entries on the page.
#Revaluation Entries
When you post a revaluation, Light generates journal entries that:
- Adjust asset and liability accounts to reflect the current exchange rate at period-end
- Record the offsetting unrealized FX gain or loss
These entries appear on the page and are linked to the accounting period in which the revaluation was run.
#Reviewing Posted Revaluations
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:
- Going to Accounting > Accounting periods ()
- Clicking on the relevant period
- Clicking Run revaluations on the FX revaluation task row
The Last run column in the entities list shows the date of the most recent revaluation for each entity.
#Reopening a Closed FX Revaluation
If an FX revaluation task has already been completed for a period, the action button changes from Run revaluations to Reopen. Clicking Reopen allows you to re-run the revaluation if adjustments are needed.
#FX Gain and Loss
FX revaluation produces two types of gains and losses:
Unrealized FX Gain/Loss — Recorded when revaluation is posted at period-end. These reflect the change in value of unsettled foreign currency balances based on current exchange rates. They may flow through the income statement (P&L) or be deferred to Other Comprehensive Income (OCI), depending on your accounting framework.
Realized FX Gain/Loss — Recorded when a foreign currency transaction actually settles (e.g., when a customer pays an invoice or when you pay a vendor). This is the final, actual gain or loss based on the rate at settlement.
#Settlement and Realized Gains/Losses
When a previously revalued item settles, the realized gain or loss is recorded.
Example:
- AR revalued: Owed 100,000 EUR, revalued to 118,000 USD at period-end
- Customer pays: Sends 100,000 EUR, bank converts at 1.19 = 119,000 USD
- You receive 119,000 USD in the bank
- The original invoice was recorded at 120,000 USD
- Realized loss: 120,000 - 119,000 = 1,000 USD
The total P&L impact across periods combines unrealized and realized gains/losses.
#Revaluation at Period-End
The typical period-end workflow is:
- Post all transactions for the period (invoices, payments, journal entries)
- Go to and open the period
- Close Account Payables, Account Receivables, and Journal Entries tasks
- Run FX revaluation for all relevant entities
- Review the revaluation entries on the page
- Click Close period to finalize
Revaluation should be run after all other transactions are posted but before the period is closed, so that FX gains and losses are included in the period's results.
#Multi-Entity Revaluation
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:
- Select all entities and revalue them at once
- Select individual entities to revalue them one at a time
- Track the Last run date for each entity to see which have been revalued
#Regulatory Considerations
US GAAP (ASC 830):
- Temporal method typically used for remeasurement
- Unrealized gains/losses generally flow to the income statement (P&L)
IFRS (IAS 21):
- Current method typically used for translation
- Unrealized gains/losses may flow to Other Comprehensive Income (OCI) rather than P&L
- Different treatment can significantly impact reported earnings
Tax considerations:
- Some jurisdictions tax only realized FX gains/losses
- Unrealized losses may not be deductible
- Consult your tax advisor on the treatment of revaluation entries
#CTA (Cumulative Translation Adjustment)
For consolidation of foreign subsidiaries, translation differences may arise when converting a subsidiary's GL from its local currency to the group currency. These are posted to a Cumulative Translation Adjustment (CTA) account in equity. When a subsidiary is disposed of, the CTA is realized and flows to P&L.
#Best Practices
- Revalue monthly — Don't wait until quarter-end; catching changes regularly produces more accurate interim results
- Close prerequisite tasks first — Make sure Account Payables, Account Receivables, and Journal Entries are closed before running FX revaluation
- Revalue all entities — Ensure every entity with foreign currency exposure is selected when posting revaluation
- Review before closing — Check the generated journal entries on the page before closing the period
- Track the Last run date — Use the Last run column in the FX revaluation dialog to confirm all entities have been revalued for the current period
- Separate realized vs. unrealized — Track both types of FX gains/losses for accurate analysis and reporting
- Document your policy — Be consistent in how and when you run revaluation across periods
#Related Articles