Lensa Inc Purchased Machinery Several Years Ago for $400,000

Lensa Inc. purchased machinery several years ago for $400,000. This year, book depreciation on the machinery was $40,000, MACRS depreciation was $35,720, and Lensa's marginal tax rate is 21%. Which of the following statements is true?

A) The book/tax difference in depreciation results in a $899 decrease in Lensa's deferred tax liabilities.
B) The book/tax difference in depreciation results in a $899 deferred tax asset.
C) The $4,280 difference between book and tax depreciation is unfavorable.
D) Both the book/tax difference in depreciation results in a $899 decrease in Lensa's deferred tax liabilities and the $4,280 difference between book and tax depreciation is unfavorable are true.