GASB Reporting Standards Require That Legally Separate Component Units Be

question 58

Essay

GASB reporting standards require that legally separate component units be included on the face of the financial statements of the primary government. Small City created a legally separate City Utility Service. The Small City council appoints the utility board members, authorizes the bonds of the utility, and approves its budget. Small City's general fund revenues are $58 million; the revenues of the utility are $100 million (the utility owns a generating plant and sells its excess power to other communities). Discuss the appropriate reporting for the City Utility Service. Do you think that this presentation is meaningful? Why or why not?

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Definitions:

Chapter

A division or section of a document, book, or legal code, often numbered or titled to indicate the topic of a particular segment.

Chapter 13 Repayment Plan

A legal process in the U.S. bankruptcy system that allows individuals with regular income to reorganize their debts and pay them off over a three to five-year period.

Creditors

Persons or entities to whom money is owed by debtors or borrowers.

Full Payment

The complete settlement of a debt or obligation, leaving no balance.