Lensa IncPurchased Machinery Several Years Ago for $400,000

Multiple Choice

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 35%.Which of the following statements is true?

A) The book/tax difference in depreciation results in a $1,498 decrease in Lensa's deferred tax liabilities.
B) The book/tax difference in depreciation results in a $1,498 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 $1,498 decrease in Lensa's deferred tax liabilities and the $4,280 difference between book and tax depreciation is unfavorable are true.