The State has a legally separate State Building Authority which has a board appointed by the Governor. The authority issues debt in its own name, holds title to buildings in its own name, and leases its building exclusively to the State. The authority would be considered a(n)
A) Primary government.
B) Component unit.
C) Related organization.
D) Affiliated organization.

Question

Quizplus · Accepted Answer

The State Building Authority is considered a component unit because it is legally separate but conducts activities on behalf of the primary government (the State), such as issuing debt and holding title to buildings that are used by the state. Component units are included in the financial reporting of the primary government if their activities are closely related to and financially accountable to the primary government.

The State Has a Legally Separate State Building Authority Which