Financial Reprting Entity, Blended & Discrete Units

Question 1

Component unit

Answer 1

Legally separate organization that the primary government officials are financially accountable for or the relationship is such that leaving it out of the financial statements would be misleading or incomplete.

Question 2

Two ways in which the component units are reported in the financial statements

Answer 2

Blended

Discretely

Question 3

Blended presentation

Answer 3

If the component unit is part of the primary government in substance, then the balances for its funds are included with similar funds in the primary government, hence, “blended”

Question 4

Discrete presentation

Answer 4

For all other component units a separate column is added to the right of the primary government’s data.