A component unit is a legally separate organization from the government, but the government is financially accountable for the organization through one or more of its elected officials. Excluding the financial information of a component unit in the primary government's financial statements would cause the statements to be misleading. An organization is considered a component unit if:
1. The primary government appoints a voting majority, or the primary government's members hold a majority seat on the Board of the organization.
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2. The organization and primary government have a relationship that meets one of the two of the following: 1. The primary government has a financial burden or benefit from the organization. 2. The primary government can impose its will on the organization.
An example of a component unit would be our Public Housing Authority's Resident Management Corporation. The Public Housing Authority uses the blended method in reporting the Resident Management Corporation's financial information.
Component units are what elected officals fo a primary government are financially accountable for legally separate organizations. It can have any relationship of a primary government that would be misleading or incomplete, if left off the financial statement.
Component units can be included in the financial statements in one of two ways. It can either be accounted for using the BLENDED method where the financial information of the component unit is "blended" with the financial statements of the primary government. The second method is the descrete presentation the component unit is financially accounted for using a seperate column and not included in the overall totals of the primary government. The University of Wyoming and the Wyoming State Department of Transportation are examples of discretely presented component units for the State of Wyoming financial statements.
A component unit is a legally separate organization from the government, but the government is financially accountable for the organization through one or more of its elected officials. Excluding the financial information of a component unit in the primary government's financial statements would cause the statements to be misleading. An organization is considered a component unit if:
ReplyDelete1. The primary government appoints a voting majority, or the primary government's members hold a majority seat on the Board of the organization.
-AND-
2. The organization and primary government have a relationship that meets one of the two of the following:
1. The primary government has a financial burden or benefit from the organization.
2. The primary government can impose its will on the organization.
An example of a component unit would be our Public Housing Authority's Resident Management Corporation. The Public Housing Authority uses the blended method in reporting the Resident Management Corporation's financial information.
Component units are what elected officals fo a primary government are financially accountable for legally separate organizations. It can have any relationship of a primary government that would be misleading or incomplete, if left off the financial statement.
ReplyDeleteComponent units can be included in the financial statements in one of two ways. It can either be accounted for using the BLENDED method where the financial information of the component unit is "blended" with the financial statements of the primary government. The second method is the descrete presentation the component unit is financially accounted for using a seperate column and not included in the overall totals of the primary government. The University of Wyoming and the Wyoming State Department of Transportation are examples of discretely presented component units for the State of Wyoming financial statements.