Diagram: Merger Tax Effects Transaction is taxable. Payment is made mostly in cash by purchasing the target firm's assets. A. Statements Check all that apply. The target firm incurs immediate tax liability for the amount of gain (difference between purchase price and book value). The acquiring firm adds acquired assets to its books at their appraised values. The acquiring firm does not create goodwill for tax purposes. The target firm distributes a liquidating dividend to its shareholders of money left over after paying taxes. Diagram: Merger Tax Effects Transaction is taxable. Payment is made mostly in cash by purchasing the target firm's assets. A. Statements Check all that apply. The target firm incurs immediate tax liability for the amount of gain (difference between purchase price and book value). The acquiring firm adds acquired assets to its books at their appraised values. The acquiring firm does not create goodwill for tax purposes. The target firm distributes a liquidating dividend to its shareholders of money left over after paying taxes