Question

The balance sheet of Hidden Valley Farms reports total assets of $850,000 and $985,000 at the beginning and end of the year, respectively. The return on assets for the year is 10%. What is Hidden Valley's net income for the year

Answer 1

Answer: $91750

Step-by-step explanation:

Following the information given, Hidden Valley's net income for the year will be calculated thus:

return on assets = net income / average assets

10% = Net income / [(850000 + 985000)/2]

0.1 = Net Income / (1835000/2)

0.1 = Net income / 917500

Net income = 917500 × 0.1

Net income = 91750

Therefore, Hidden Valley's net income for the year is $91750.