Two cities entered into a contractual agreement to operate a landfill. The cities each contributed the necessary assets to operate the landfill in proportion to their populations. First City has the ability to appoint five members of the seven-person governing body of the landfill. The appointees serve for six-year terms, cannot be reappointed, and can be removed only for cause. First City has no obligation to contribute to the landfill if the landfill revenues are insufficient to cover current operating costs. The landfill would be considered a(n)
A) Primary government.
B) Component unit.
C) Related organization.
D) Affiliated organization.

Question

Quizplus · Accepted Answer

First City appoints a majority of the governing body, but it does not have a financial benefit or burden relationship with the landfill, making it a related organization.

Two Cities Entered into a Contractual Agreement to Operate a Landfill