The story is the first case of the classic Chan collections. Bodhidharma comes from the west and is received by the emperor. The emperor lists what he has done, the monasteries built, the scriptures copied, the monks supported, and asks what merit he has earned. None whatsoever, says the monk. Asked what the highest meaning of the holy truths is, he answers that there is only vast emptiness and nothing holy in it. Asked who then is standing before the throne, he says he does not know, and leaves for the north.
As a piece of teaching the exchange is superb, and it does exactly what Chan needed it to do: it sets a tradition of direct insight against a tradition of accumulated merit, and it uses the most lavish royal patron in Chinese Buddhist history as the foil. As history it does not hold. The earliest biography of Bodhidharma, in the collection of eminent monks compiled in the seventh century, knows nothing of any meeting with the emperor. The dialogue appears only in Chan lineage texts of the eighth century and later, in a period when the school was constructing its own genealogy and its own founding scenes, and it grows in the telling across successive collections until it reaches its familiar form in the eleventh century.
The atlas records the meeting as debunked rather than debated, because there is no camp arguing for it: the historical study of Chan treats it as a retrospective composition, and the interest has long since moved from whether it happened to what its invention tells us about the eighth century school that needed it. That is not a diminishment of the story. It is one of the most effective pieces of religious literature ever written, and it was written about a real emperor whose real generosity made him the perfect target.