How does Exit handle revenue, cost, and expense accounts when the functional currency differs from the U.S. dollar?

According to Exit's 2025 Franchise Disclosure Document, when the functional currency differs from the U.S. dollar, which is the reporting currency, all revenue, cost, and expense accounts are translated using an average of exchange rates in effect during the year. Assets and liabilities recorded in foreign currencies are translated at the exchange rate as of the balance sheet date.

The resulting translation adjustments are then recorded as a separate component of stockholders' equity. This component is specifically identified as accumulated other comprehensive loss. This accounting treatment ensures that Exit's financial statements accurately reflect the impact of currency fluctuations on its financial position and performance.

This approach aligns with U.S. GAAP, which requires that recognized revenue, expenses, gains, and losses be included in net income. However, certain changes in assets and liabilities, such as these foreign currency translation adjustments, are reported as a direct adjustment to the equity section of the balance sheet. These items, along with net income, are considered components of comprehensive income, providing a more complete view of Exit's financial activities.