For Hardees' entities outside the United States, how are income and expense accounts translated into U.S. dollars?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
The functional currency of our foreign entities is the currency of the primary economic environment in which the entity operates. Functional currency determinations are made based upon a number of economic factors, including but not limited to cash flows and financing transactions. The operations, assets and liabilities of our entities outside the United States are initially measured using the functional currency of that entity. The income and expense accounts are then translated into U.S. dollars at the average exchange rates prevailing during the period. The assets and liabilities are translated into U.S. dollars at exchange rates in effect at the balance sheet date.
Source: Item 21 — Financial Statements (FDD pages 84–85)
What This Means (2025 FDD)
According to Hardees' 2025 Franchise Disclosure Document, the functional currency of Hardees' foreign entities is the currency of the primary economic environment in which the entity operates. This determination is based on several economic factors, including cash flows and financing transactions. The operations, assets, and liabilities of Hardees' entities outside the United States are initially measured using the functional currency of that entity.
Subsequently, the income and expense accounts are translated into U.S. dollars using the average exchange rates prevailing during the reporting period. This means that the revenues and costs incurred by international Hardees locations are converted to U.S. dollars at the average exchange rate for the entire period (e.g., a quarter or a year) during which those transactions occurred.
In contrast, the assets and liabilities are translated into U.S. dollars at the exchange rates in effect at the balance sheet date. This approach reflects the value of what the company owns and owes at a specific point in time, using the currency exchange rate on that particular date.