Groups and associates
On 1 January 2026 Selby Co acquired 75% of the 4,000,000 $1 ordinary shares of Thorne Co. Selby Co paid $6,000,000 in cash on that date and will pay a further $2,420,000 on 1 January 2028. Selby Co's cost of capital is 10% a year.
Selby Co will also pay up to $1,500,000 more if Thorne Co meets profit targets; the fair value of this contingent consideration at 1 January 2026 was $900,000. Legal fees for the acquisition were $200,000.
At 1 January 2026 the carrying amount of Thorne Co's net assets was $7,100,000. A property's fair value was $800,000 above its carrying amount, and Thorne Co faced a lawsuit, disclosed as a contingent liability in its own financial statements; it is a present obligation arising from a past event, and its fair value was $300,000. Non-controlling interest is measured at its fair value of $2,600,000 at acquisition.
What is the goodwill arising on the acquisition of Thorne Co? (2 marks)