The Friends of the City Public Library Foundation is a legally separate, tax-exempt 501(c)(3) entity organized for the purpose of raising funds to provide financial assistance to the library. Members of the board of the foundation are elected by the existing foundation board members. The foundation provides financial assistance to the library, but the foundation receives no financial support from the library. If dissolved, all of the foundation assets would revert to the library. In what manner should the foundation be presented in the financial statements of the library?

Question

Quizplus · Accepted Answer

Discretely presented component units are those that are legally separate from the primary government but for which the primary government is financially accountable, yet their operations are not so intertwined with the primary government to warrant blending. In this case, the foundation is a separate legal entity that exists to support the library, making discrete presentation the appropriate method to reflect its relationship with the library in the financial statements.

The Friends of the City Public Library Foundation Is a Legally