Assume that Charity A and Charity B are alike in every possible way except as described next. Assume that each question is independent of the other questions.

a. Each charity suffers significant damage from a hailstorm this year. Each hires a person to repair this damage. Each of these workers donates the labor to the charity. Charity A examines the repair work and decides that it required a specialized skill that it would have had to buy. Charity B examines the repair work and decides that it did not require a specialized skill. After recording these events, which entity will report the larger amount of net assets? Explain why.

b. Each charity receives a large investment in shares of a publicly traded company. The investment must be held forever. Charity A can spend the resulting income as it sees fit. Charity B must spend the resulting income to supplement salaries. Both charities receive the same amount of income this year. Both charities immediately spend the income to supplement salaries. After recording these events, which charity will report the larger amount of net assets without donor restrictions?

c. At the beginning of the current year, each charity combines with another similar charity. In both cases, the similar charity has assets worth $780,000, but with a net book value of $700,000. It has no liabilities. Both Charity A and Charity B paid $800,000 in cash to make this acquisition. Charity A is acquiring a charity that gets most of its resources through exchange transactions (it sells cookies and popcorn). Charity B is acquiring a charity that gets most of its resources through donations. After those events, which charity will report the larger amount of net assets without donor restrictions?

d. Assume that these two charities are both private not-for-profit hospitals. During the year, each does an appendectomy on one of its patients. The cost of the operation is $76,000, but the normal charge to the patient is $100,000. Because the patient was not insured, Charity A gave implicit price concessions and hoped to collect $30,000. Despite efforts to collect, by the end of the year, hospital officials realized that nothing could be collected. Charity B assumed from the beginning that collection of any amount was impossible and made no efforts to collect. After that, which charity will report the larger amount of earned revenue?

e. Both Charity A and Charity B have volunteers make 1,000 cakes to sell to their donors. The cost of the material for these cakes is $20 each, but they will be sold for $50 apiece. Officials for Charity A believed that $50 was a reasonable fair value for a cake. Officials for Charity B believed that the fair value of the cakes was actually only $30 apiece. After the cakes are sold to the donors, which charity will report the larger amount of net assets without donor restrictions?