Based on the information provided in the image and the original document, let's work through the effects of the events on the balance sheet and income statement for both scenarios (a and b). Scenario a: Historical Cost Adjusted for Depreciation and Impairment Losses Acquisition of the equipment for cash on January 1, 2016 Balance Sheet: Increase in assets (equipment) by $100,000, decrease in assets (cash) by $100,000. Income Statement: No immediate effect. Depreciation for 2016 Balance Sheet: Decrease in assets (accumulated depreciation) by $25,000 (since the useful life is 4 years, $100,000 / 4). Income Statement: Depreciation expense of $25,000, reducing net income. Impairment loss for 2016 Balance Sheet: Further decrease in assets (equipment) to reflect the new market value of $60,000, so an impairment loss of $15,000 ($75,000 book value - $60,000 market value). Income Statement: Impairment loss of $15,000, reducing net income. Depreciation for 2017 Balance Sheet: Decrease in assets (accumulated depreciation) by $25,000. Income Statement: Depreciation expense of $25,000, reducing net income. Depreciation for 2018 Balance Sheet: Decrease in assets (accumulated depreciation) by $25,000. Income Statement: Depreciation expense of $25,000, reducing net income. Sale of the equipment on January 1, 2019 Balance Sheet: Removal of equipment (net book value) and accumulated depreciation from assets, increase in cash by $26,000. Income Statement: Gain or loss on sale of t