Apply refraction at a single spherical surface with sign convention ($u=-40$ cm, $R=-20$ cm based on the geometry of the figure):

$\frac{{\mu }_2}{v}-\frac{{\mu }_1}{u}=\frac{{\mu }_2-{\mu }_1}{R}$

$\frac{1.54}{v}-\frac{1}{-40}=\frac{1.54-1}{-20}=-\frac{0.54}{20}$

$\frac{1.54}{v}=-\frac{1}{40}-\frac{0.54}{20}=-\frac{2.08}{40}\Rightarrow v\approx -29.61$ cm

Lateral magnification for a single refracting surface: $m=\frac{{\mu }_{1}v}{{\mu }_{2}u}=\frac{1\times (-29.61)}{1.54\times (-40)}\approx 0.48$.

$h_i=m\times h_o=0.48\times 2\approx 0.96\approx 1$ cm.