The balance sheet of Hidden Valley Farms reports total assets of $450,000 and $550,000 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?

a. $5,000,000.

b. $55,000.

c. $5,500,000.

d. $50,000.

d. $50,000.

In order to find the net income we will multiply the return on assets with average total assets. We need to find average total assets because the firm had different beginning and ending assets therefore we need to take an average of both the numbers. Average assets = (Beginning assets + Ending assets) / 2 = 450,000+550,000 = 1,000,000/2 = 500,000

Average assets = 500,000

Net income = Average assets * Return on assets

Net income = 500,000 * 0.1

Net income is 50,000

Hidden Valleys Net income for the year was $50,000