An entity is a component unit of another entity if

Question

Quizplus · Accepted Answer

A component unit is a legally separate organization that is affiliated with a primary government. An entity is considered a component unit if it meets one of three criteria: (1) the primary government is financially accountable for it, (2) the entity is fiscally dependent on the primary government, or (3) the entity provides services exclusively to the primary government. Option B is correct because it states that the entity is fiscally dependent on the primary government and has a benefit or burden relationship with it.

An Entity Is a Component Unit of Another Entity If