The following information pertains to a farm in the Rio Grande Valley. Cash receipts from farm $500,000 marketings Receipts of government $100,000 payments Other income from farm sources $50,000 Production expenses $300,000 Value of real estate assets $10,000,000 Value of non-real estate assets $1,000,000 Financial assets $5,000,000 Liabilities $8,000,000 a. Net farm income for this operation is $ b. The equity for this operation is $

(A) $350,000

(B) $8,000,000

Explanation:

The following information was gotten from a farm in the Rio Grande Valley

Cash receipts from farm is $500,000

Marketings Receipts of government is $100,000

Payments other income from farm sources $50,000

Production expenses is $300,000 Value of real estate assets is $10,000,000

Value of non-real estate assets is $1,000,000

Financial assets is $5,000,000

Liabilities is $8,000,000

(A) The net income farm income for this operation can be calculated as follows

= Cash receipts from farm + marketing receipts of government + payment from other income from farm sources-production expenses

= $500,000 + $100,000 + $50,000 - $300,000

= $650,000-$300,000

= $350,000

(B) The equity from this operation can be calculated as follows

= value of real estate assets + value of non real estate assets + financial assets assets- liabilities

= $10,000,000 + $5,000,000 + $1,000,000 - $8,000,000

= $16,000,000-$8,000,000

= $8,000,000