Investments in Associates

In 2019 Left Ltd acquired a 20% investment in Right Ltd for $2 million. At the time of acquisition, the equity in Right Ltd consisted of Share Capital of $5 million and Retained profits of $3 million. This equity reflected the fair value of net assets with the exception of a depreciable asset that was carried at $400,000 below its fair value. This asset had a remaining estimated useful life of 10 years.

During 2020 Right Ltd revalued its assets by $300,000.

At 30 June 2021 the carrying amount of the investment in Right Ltd was $2.7 million in the books of Left Ltd.

At 30 June 2021 Right Ltd held inventory purchased from Left Ltd. Left Ltd had recorded a profit of $150,000 on the sale. This inventory had been sold by Right Ltd by 30 June 2022.

Right Ltd declared an after-tax profit of $500,000 and dividends of $250,000 for the year ended 30 June 2022.

REQUIRED:

Calculate the amount of goodwill acquired by Left Ltd pertaining to the investment in Right Ltd and state how this goodwill would be reported by Left Ltd.