Alpha holds investments in two other entities, Beta and Gamma. All three entities prepare financial statements to 31 March and the statement of financial positions of the three entities at 31 March 2007 were as follows:

Note 1 - purchase of shares in Beta
On 1 April 2006 Alpha purchased 40 million shares in Beta by issuing one share in Alpha for every two shares purchased in Beta. This share issue has not been recorded in the books of Alpha.
The quoted price of an Alpha share at 1 April 2006 was $6 and the quoted price of a Beta share at the same date was $2.40. Alpha incurred incremental legal and professional costs of $2 million in connection with the acquisition, of which $800 000 related to the cost of issuing its shares. These acquisition costs have been charged as an expense in the statement of comprehensive income of Alpha for the year ended 31 March 2007.
The retained earnings of Beta as shown in its statement of financial position at 31 March 2006 were $35 million. The directors of Alpha carried out a fair value exercise on the net assets of Beta at that date. The following matters arose out of the exercise:
(i) Property, plant and equipment comprised non-depreciable land with a carrying amount of $50 million and a market value of $60 million, plus plant and equipment with a carrying amount of $30 million and a market value of $38 million. The estimated future economic life of the plant and equipment at 1 April 2006 was four years (straight line depreciation). None of the property, plant and equipment held by Beta at 1 April 2006 had been disposed of by 31 March 2007.
(ii) At 1 April 2006 Beta was engaged in legal action against a supplier in respect of damages caused by the supply of faulty products, Beta was claiming damages of $5 million. In the middle of March 2006 the customer had offered an out of court settlement of $3 million and Beta's lawyers advised that this was a fair offer given the likelihood of success in court. However, Beta refused the offer, took the case to court, and subsequently won the case. The directors of Beta had not recognized any receivable in respect of the case in the statement of financial position at 31 March 2006 because the claim was a contingent asset. The directors of Alpha considered that the fair value of the contingent asset at 1 April 2006 was $3 million.
(iii) At 1 April 2006 Beta had a long-standing portfolio of loyal customers that regularly ordered goods and services from Beta. In addition, the workforce of Beta was highly trained and the expertise of the workforce was seen by the directors as conferring significant competitive advantage to Beta. The customer relationships and the expertise of the workforce were not included in the statement of financial position of Beta at 31 March 2006 because the directors did not consider that they met the recognition criteria in IAS 38, Intangible Assets for internally developed Intangible Assets. The directors of Alpha considered that the customer relationships had a market value of $20 million at 1 April 2006 and that based on the life cycle of the existing products, the existing customers would continue to order goods and services from Beta for at least five years from that date. They estimated that the fair value of the competitive advantage conferred by the workforce was $15 million at 1 April 2006 and that the average period to retirement for a typical employee was 20 years.
(iv) The financial director of Alpha has stated that the fair value adjustments will create temporary differences for deferred tax purposes.
Note 2 - purchase of shares in Gamma
On 1 April 2005 Alpha purchased 20 million shares in Gamma for a cash payment of $1.60 per share. The retained earnings of Gamma were $15 million at 1 April 2005. This shareholding has resulted in the directors of Alpha being able to exercise a significant influence over the operating and financial policies of Gamma. The fair value of the net assets of Gamma at 1 April 2005 was equal to their carrying amounts in Gamma's statement of financial position.
Note 3 - inventories
The inventories of Beta and Gamma at 31 March 2007 included components purchased from Alpha during the year at a cost of $20 million to Beta and $16 million to Gamma. Alpha supplied these components at cost plus a mark-up of 25%.
Note 4 - trade receivables and payables
The trade receivables of Alpha included $5 million receivable from Beta and $4 million receivable from Gamma in respect of the purchase of components (see Note 3). The trade payables of Beta and Gamma include an equivalent amount payable to Alpha.
Note 5 - other information
(i) Neither the goodwill arising on acquisition of Beta nor the investment in Gamma has suffered any impairment since the dates of investment by Alpha in these entities.
(ii) The rate of tax to apply to temporary differences is 25%.

Required:
(a) Prepare the consolidated statement of financial position of Alpha at 31 March 2007.
(b) Explain the effect on your answer to (a) if the acquisition agreement with the former shareholders of Beta provided for an additional cash payment of 50 cents per share acquired. The additional amount, payable on 31 March 2008, is contingent on the profits of Beta exceeding a given level in the two years ending 31 March 2008.

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Gamma 5000 Alpha Beta 5000 Assets Non-current assets Property, plant and equipment Investments (Note 2) 25 000 32 000 157 000 85 000 75 000 85 000 75 000 Current assets Inventories (Note 3) Trade receivables (Note 4) Cash and cash equrvalents 3 000 43 000 11 000 87 000 244 000 30 000 30 000 10 000 70 000 155 000 28 000 31 000 9 000 43 000 Total assets Equity and liabilities Equity Share capital ($1 shares) Retained earnings Total equity Non-current liabilities Long-term borrowings Deferred tax Total non-current liabilities Current liabilities Trade and other payables (Note 4) Current tax payable Total current liabilities Total equity and liabilities 70 000 55 000 126 000 50 000 44 000 94 000 50 000 28 000 78 000 50 000 35 000 85 000 25 000 12 000 37 000 22 000 17 000 39 000 25 000 9 000 34 000 244 000 17 000 7 000 24 000 155 000 20 000 6000 26 000 43 000