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ms500
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Posted: 29 Jul 2010 at 13:53 | IP Logged  

Valley town's public school system is administered by a seperatly elected board of education. The board of education is not organised as a seperate legal entity and does not have the power to levy taxes or issue bonds. Valley's city council approves the school system's budget. How should Valley report the public school system's annual financial result's

           Discrete        &nbs p;    Blended
           Presentation
a           ;     yes         &nb sp;    yes
b           ;     yes         &nb sp;   no
c           ;     no         &nbs p;    yes
d           ;     no                no

Ans is- C       no-yes

As per my understanding, answer should be -b
for blended presentation, following requirements should meet

Seperately elected governing body
Legally seperate
Fiscal independancy

since, blended presentation is not meeting all above criteria, it is should be a discrete presentation

Appreciate, if some one clarify above

thanks


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caixinran
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Posted: 29 Jul 2010 at 15:26 | IP Logged  

Fiscal independence is the most important criteria.

The school board has no power to levy taxes or issue bonds.
And the budget need to be approved by the city, then the
school system/board has no fiscal independence.

Thus, blended reporting is required. and Discrete reporting
is not permitted.

Good luck to all of us!

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nipson
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Posted: 30 Jul 2010 at 00:21 | IP Logged  

This is why I dislike the exam makers, they often try too hard to confuse us and end up contradicting themselves.

Here is a similar problem, different answer:

Excel City School District has a separate elected governing body that administers the public school system. The district's budget must be approved by the city council of Excel City. The school district's financial activity should be reported in the City's financial statements by:
A.  Discrete presentation.




B.  Blending.



C.  Footnote.



D.  Not at all.





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divyagovil1
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Posted: 30 Jul 2010 at 06:56 | IP Logged  

All, please refer following two posts as well:

http://www.cpanet.com/cpa_forum/forum_posts.asp?TID=22425&am p;KW=Valley+town%27s+

http://www.cpanet.com/cpa_forum/forum_posts.asp?TID=20335&am p;KW=Valley+town%27s+

I remember this topic confusing me as well. Hope above two posts make things more clearer. Thanks !



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dev03
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Posted: 30 Jul 2010 at 10:38 | IP Logged  

what about interfund transfers...........they are reported as expenditure or transfer out in other financing sources............
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