Choice "A" is correct. South City School District meets the test of component unit of the City: It is financially accountable to the City. Thus, its financial data needs to be reported with the City's financial data. However, since the school district is not substantially the same as the City, because it is a legally separate entity, and since the school district does not exclusively service or benefit the City itself, the financial data should be reported using the discrete presentation method.Choice "d" is incorrect. Since South City School District meets the test of component unit, its financial data needs to be reported with the City's financial data. The financial data would not be blended since the school district does not meet the tests for blending-the school district is not substantially the same as the City and the school district does not exclusively service or benefit the City itself.
Choice "b" is incorrect. South City School District meets the test of component unit of the City: It is financially accountable to the City. Thus, its financial data needs to be reported with the City's financial data. However, since the school district is not substantially the same as the City and since the school district does not exclusively service or benefit the City itself, the financial data should be reported using the discrete presentation method. The discrete presentation is either in condensed financial statements with the notes to the reporting entity's financial statements, or in combining statements in its general purpose financial statement. In this response, the word only made this response incorrect.
Choice "c" is incorrect. Since South City School District meets the test of component unit, its financial data needs to be reported with the City's financial data. The financial data would not be blended since the school district does not meet the tests for blending-the school district is not substantially the same as the City and the school district does not exclusively service or benefit the City itself.