In a merger, the acquiring firm can either pay in cash or make a stock offer. The acquirer can purchase the target firms assets or buy shares directly from the target firms shareholders. Consider the following statement about the impact of the takeover bid structure: The structure of the takeover bid affects the types of federal and state regulations to which the acquiring firm will be subjected. Is this statement true or false? False True A takeover bid can be structured in different ways, making it either a taxable or a nontaxable offer. Based on your understanding of the impact of takeover bids on the target firm and the acquiring firm, review the diagram below and check which of the following statements are correct. Diagram: Merger Tax Effects A. Statements Check all that apply. The target firm distributes a liquidating dividend to its shareholders of money left over after paying taxes. The acquiring firm does not create goodwill for tax purposes. The acquiring firm adds acquired assets to its books at their appraised values. The target firm incurs immediate tax liability for the amount of gain (difference between purchase price and book value).