Where to put common code found in multiple models?

I have two models that contain the same method:

def foo
  # do something
end

Where should I put this?

I know common code goes in the lib directory in a Rails app.

But if I put it in a new class in lib called 'Foo', and I need to add its functionality to both of my ActiveRecord models, do I do that like this:

class A < ActiveRecord::Base
includes Foo

class B < ActiveRecord::Base
includes Foo

and then both A and B will contain the foo method just as if I had defined it in each?