Which of the following circumstances would indicate that a potential component unit (PCU) should be included as part of the government financial reporting entity?
A) The primary government is entitled to the resources of the PCU.
B) Officials of the primary government appoint a majority of the members of the governing board of the PCU.
C) The primary government significantly influences the programs and activities of the PCU.
D) Officials of the primary government appoint a majority of the members of the PCU's governing board and the primary government is able to impose its will on the PCU.

Question

Quizplus · Accepted Answer

A PCU should be included in the government financial reporting entity if the primary government appoints a majority of the governing board and can impose its will on the PCU, indicating control and accountability.

Which of the Following Circumstances Would Indicate That a Potential