Special attention is required for transactions between and among the primary government, its blended component units, and its discretely presented component units. The following table can be used as guidance for recording and displaying certain of these intra-entity transactions and balances in the fund financial statements.

For government-wide financial statements, resource flows between a primary government and a blended component unit should be reclassified as an internal activity in the financial statements of the reporting entity. Resource flows between a primary government and its discretely presented component units should be reported as if they were external transactions. However, receivable and payable balances between a primary government and a discretely presented component unit should be displayed on a separate line.

Taken From : Governmental Accounting Made Easy

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