Answer to Question #223704 in Accounting for Milan

Question

Lyons Youth Association (LYA) is a sports youth organization for boys serving the Lyons Township community for the past 75 years. The five elected members of the Lyons Township town council serve as the board of governance of the LYA is approved by the town council. Assuming the LYA is a separate legal entity, the Lyon's Township financial statements would most likely address the relationship between the Township and the LYA as:

• A component unit and the LYA would be displayed using blended presentation.

Why would this be considered a blended presentation? Can you provide me simple explanation? Thank you.

Answer 1

Solution:

Blended presentation refers to where the component unit’s transactions and balances are reported as if they were part of the main government. That is, they are blended into a column called governmental activities and there is no different or separate column named component unit.

 

Lyons Youth Association (LYA) would be displayed using blended presentation since the primary government and the component unit (LYA) is controlled by same members of the governing body, including the fact that LYA provides services solely to the primary government.