Most component units will be included in the financial statements of the reporting entity using discrete presentation. The reporting entity’s government-wide statement of net assets should include a column to display the combined balance sheet of the discretely presented component units. The presentation of discretely presented component units in the government-wide financial statements under GASBS 34 is discussed in Chapter 4. Discretely presented component units are presented only in the government-wide financial statements. There is no reporting of discretely presented component units at the fund level.
Similarly, the reporting entity’s government-wide statement of activities should include one column to display the activities for discretely presented component units that use governmental fund accounting.

GASBS 34’s requirements for providing information in the basic financial statements about component units of a reporting entity government can be met in one of three ways (note that these requirements do not apply to component units that are fi duciary in nature). These options are discussed later in this chapter.

Taken From : Governmental Accounting Made Easy

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