Electronic Computer Systems (ECS) designs, manufactures, sells, and services networked computer systems, associated peripheral equipment, and related network, communications, and software products.
Exhibit 9.20 presents geographical segment data. ECS conducts sales and marketing operations outside the United States principally through sales subsidiaries in Canada, Europe, Central and South America, and the Far East; by direct sales from the parent corporation; and through various representative and distributorship arrangements. The company's international manufacturing operations include plants in Canada, the Far East, and Europe. These manufacturing plants sell their output to the company's sales subsidiaries, the parent corporation, or other manufacturing plants for further processing.
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ECS accounts for intercompany transfers between geographic areas at prices representative of unaffiliated-party transactions.
Sales to unaffiliated customers outside the United States, including U.S. export sales, were $5,729,879,000 for Year 5, $4,412,527,000 for Year 4, and $3,179,143,000 for Year 3, which represented 50 percent, 47 percent, and 42 percent, respectively, of total operating revenues. The international subsidiaries have reinvested substantially all of their earnings to support operations. These accumulated retained earnings, before elimination of intercompany transactions, aggregated $2,793,239,000 at the end of Year 5, $2,070,337,000 at the end of Year 4, and $1,473,081,000 at the end of Year 3.
The company enters into forward exchange contracts to reduce the impact of foreign currency fluctuations on operations and the asset and liability positions of foreign subsidiaries. The gains and losses on these contracts increase or decrease net income in the same period as the related revenues and expenses, and for assets and liabilities, in the period in which the exchange rate changes.
Required
Discuss whether ECS should use the U.S. dollar or the currencies of its foreign subsidiaries as its functional currency.

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EXHIBIT 9.20 Electronic Computer Systems Geographical Segment Data (amounts in thousands) (Problem 9.22) Year 3 Year 4 Year 5 Revenues U.S. Customers 5,810,598 1354,339 1.921.043 2,017.928 Total$5,826,5346937,6497.828,526 4,221,631 82,649 114,582 137,669 Total...$2,342.392 3,367064 4,359,300 s858,419 $1,120,356 1,443,217 Intercompany577934 659,204 912.786 $4,472,195 $5,016,606 Europe Customers.. $2,259,743 $3,252,482 $1,66353 1279,560 .356.003 Total $7.590.357 9.389,444 11475446 Income United States Canada, Far East, Americas 342,657$ 758,795 634,543 278,359 (126,77)59.690 512,754 770,135 390,787 405,636 207,187 Eliminations (38.676) Operating income ...S 828,709 $1.612,007 $1,635,000 143,665 Interest Income 116,899 122,149 .. $857529 $1,68953 $1740845 Assets United States$3911,491 $4,627,838 2,246,333 843,067 Corporate Assets (temporary cash investments)2,035,557 1.979,470 3,093,818 1,293,906 2.057,528 Canada, Far East, Americas 815,067 Eliminations.1406373) (1289,322) (1.579,135) $7,173,326 $8,407 $10,111,556