Marta City’s school district is a legally separate entity, but
two of its seven board members are also city council members
and the district is financially dependent on the city. However,
major debts of the school district are expected to be paid by
school taxes. The school district should be reported as a

(b) The requirement is to determine how the school
district should be reported. A component unit is a legally separate
organization for which the elected officials of a primary government
are financially accountable. The school district is a
component unit, which can be presented either discretely or
blended. The unit is blended if (1) the governing body of the
component unit is substantially the same as the primary government,
and (a) there is a financial benefit/burden relationship, or
(b) there is common management, (2) the services provided are
entirely, or almost entirely to the primary government, or (3) the
component’s debt will be repaid entirely or almost entirely by
the primary government. None of these criteria exist in this situation
and, therefore, the school district should not be presented on
a blended basis. Its financial information should be presented
discretely.