Hanover Agencies Limited (HAL) is a distributor of electrical products, located in Lucea Hanover. The company was incorporated on the 1st of January 2019 with a share capital of 6,000,000 $2 ordinary shares. On the date of the incorporation the company acquired two (2) delivery trucks at a cost of $4,000,000 each and decided to depreciate the trucks using the units of output method. The company planned to keep the trucks for a useful life of 200,000 miles each. The residual value of each truck is estimated to be $500,000 each after 200,000 miles.

On the 1 March 2020 the company received a government grant of $3,000,000 to cover 60% of the cost of a new solar system. The solar system has a useful life of five years with no residual value. On June 1, 2020 the company decided to construct a new office complex in Green Island, Hanover and borrowed a loan from the International Bank of Commerce (IBC) of $100,000,000 at a nominal interest rate of 10%. The effective interest rate on the loan was however determined to be 12%. The Office complex will be rented to other businesses. Construction of the office complex began on 1 July 2020 and was completed on May 31,2021, at a construction costs of $156,000,000. Construction on the office complex was suspended during the month of January 2021. The company (HAL) invested 40% of the money received from IBC for the period October 1,2020 to 31 January 2021 at an interest rate of 8%.

On January 1 2022, the company bought 1,600,000 of the ordinary share capital of Negril Limited at a price of $7,600,000 and 30% of the ordinary shares of Cove Limited for $400,000. The total share capital of Negril Limited was 2,000,000 $1 ordinary shares. At the date of the acquisition the retained earnings of Negril Limited was $76,000 and the general reserve balance was $123,000. Cove Limited is a small distribution company in Hanover with a share capital of 600,000 $1 ordinary shares.

The purchase consideration for Negril Limited was satisfied by the issue of 3 ordinary shares in Hanover Agencies Limited for every 4 shares acquired in Negril Limited. At this date the market price of a share in HAL was $3.20. The balance on the purchase consideration represents an issue of $2,000,000 in 10% loans stocks by HAL to the shareholders of Negril Limited and a deferred cash payment, to be satisfied in 5 years time (appropriate discount rate 9%).

On June 30, 2022 one of the delivery trucks is involved in an accident and is sold for $700,000. HCL replaces this truck with a new truck at a cost of $7,000,000. The residual value of this truck is $1,000,000 after using it for 200,000 miles.

The CEO for Hanover Agencies Limited is the also the newly appointed CEO for a not-for-profit organization, Hanover Society for the Poor (HSP). He does not believe that financial statements should be prepared for HSP. He remarked that it is a complete waste of resources and time.

Requried: using ACCA principles calculate the goodwill acquired by HAL on the acquisition of Negril limited, if the fair value of Non-Controlling Interest (NCI) was $1,900,000. (10 marks)