Lensa Incorporated purchased machinery several years ago for $400,000. This asset is 7 year property. 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?

Multiple Choice The book/tax difference in depreciation results in a $899 decrease in Lensa's deferred tax liabilities.

The book/tax difference in depreciation results in a $899 deferred tax asset.

The $4,280 difference between book and tax depreciation is unfavorable.

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.