Problem 2 (21 points): On October 1, 2015, Deaton Company acquired a new delivery truck in exchange for an old delivery truck that it had acquired in 2012. The old truck was purchased for $35,000 and had a net book value of $13,300. On the date of the exchange, the old truck had a fair value of $14,000. In addition, Deaton paid $45,500 cash for the new truck, which had a list price of $63,000. The exchange lacked commercial substance. (a) At what amount should Deaton record the new truck for financial accounting purposes? (2 points) (b) What was the amount of gain or loss Deaton should recognize on the income statement? Provide your reasoning. Don't just give the dollar amount. (2 points) (c) Prepare the journal entries required for this exchange. (4 points) (d) Instead of paying cash and trading in the old truck, Deaton traded in the old truck and a piece of land. The land costed Deaton $48,000 to acquire initially and now the recoverable amount of the patent is $45,500. Prepare ALL the necessary journal entries for this exchange. (4 points) (e) Same information as in (d), now assume the only difference is that the exchange had commercial substance. Is the income higher, lower or the same compared to the case when the transaction lacked commercial substance and by how much? (Note: ignore the tax rate effect, or assume the tax rate is 0 percent). (2 points) (f) Same information as in (d) [ignore information in (e)], now assume Deaton received a grant from the government of $2,000 to exchange for the old truck. Analyze the underlying transaction with respect to the receipt of the government grant. Specifically, what are possible accounting treatments for the transaction? What amount should Deaton record the new truck for each method? (4 points) (g) Continue with (e), which line item(s) on the balance sheet and income statement are (g) Continue with (e), which line item(s) on the balance sheet and income statement are affected? Everything else being equal, which method will give Deaton higher ROA (note: ROA is defined as net income divided by total assets)? As a Deaton's chief accountant, which method do you prefer and why (interpret your ROA results and provide your reasoning)? (3 points)