The City created a legally separate entity to operate a County Hospital.The City Council appoints a voting majority of the board of the Hospital.The City cannot impose its will on the Hospital and there is no potential for a financial benefit or financial burden to the City.In what manner would the Hospital be included in the City's Basic Financial Statements?
A)Blended.
B)Discretely presented.
C)Only by note disclosure of the relationship.
D)Not included in any manner.

Question

Quizplus · Accepted Answer

Since the Hospital is a legally separate entity and the City cannot impose its will or receive any financial benefit or burden, it would only be necessary to disclose the relationship between the two entities in the notes to the financial statements. Therefore, the Hospital would not be included in the City's Basic Financial Statements and the best choice is option C, only by note disclosure of the relationship.

The City Created a Legally Separate Entity to Operate a County