For Benihana, how are revenues and expenses of foreign operations translated into U.S. dollars?

According to Benihana's 2024 Franchise Disclosure Document, the process for translating foreign operations' financial data into U.S. dollars involves specific accounting methods. Assets and liabilities of these foreign operations are translated into U.S. dollars using the exchange rate on the balance sheet date. This means that at the end of the accounting period, the values of what the foreign operations own (assets) and owe (liabilities) are converted to U.S. dollars at the rate prevailing on that specific date.

For revenues and expenses, a different approach is used. These items are translated at average monthly exchange rates. This method takes into account the fluctuations in exchange rates throughout the month, providing a more representative conversion of the financial performance over the period. The gains or losses that arise from these translations are not included directly in the company's net income but are treated as 'other comprehensive income (loss).' These gains or losses are then accumulated as a separate component of stockholders' equity.

These currency translation gains or losses are specifically recorded in 'accumulated other comprehensive loss' within stockholders' equity. For example, in 2022, Benihana experienced a loss of approximately $0.2 million, while in 2021, there was a gain of approximately $1,000 due to these currency translations. This accounting treatment ensures that the impact of currency fluctuations on the company's financial position is transparently reported, separate from its operational profitability.