Choice "B" is correct. Valley Town's Board of Education is a special purpose local government with a separately elected board, but it is not a separate legal entity and it does not have the power to levy taxes or issue debt. The governing ability of the board is so intertwined with the town and the entity is so dependent on the primary government (it fails the SELF test and is not a legal entity) that it is clearly a component unit. The failure of the legal entity component of the SELF test results in using the blended method to report within Valley Town.Rule: Blending is used when the component unit is so intertwined with the primary government that it is in substance the same as the primary government. One indication of a component unit's blending with the primary government is its failure of the "legal entity" test. Entities that are not legally separate entities are blended with the primary government.Choice "a" is incorrect. Simultaneous presentation of a component unit in both a blended and discrete manner is impossible.
Choice "d" is incorrect. Discrete presentation is not appropriate for the Board of Education because it meets the criteria for blended presentation.Choice "c" is incorrect. Valley Town's Board of Education is a special purpose local government that fails to qualify as a primary government because it does not stand by itself. Although separately elected, the entity's board does not represent a legally separate entity and does not have the authority to function as a fiscally independent entity. The Valley Town Board of Public Education does not qualify as a primary government and must be included as a component unit of another government.