Alpha Company prepares consolidated financial statements under the International Financial Reporting Standards (IFRS). The accountant has prepared draft financial statements but is unsure about a number of items relating to an acquisition.

On 1 April 2012 Alpha Company acquired a new subsidiary, Beta Company, purchasing all the 100 million shares of Beta Company. The terms of the sale agreement included the exchange of three shares in Alpha Company for every two shares acquired in Beta Company. On 1 April 2012, the market value of a share in Alpha Company was 20 and the market value of a share in Beta Company was 27. The terms of the share purchase included the payment of an additional 2.42 per share acquired provided the profits of Beta Company for the two years ending 31 March 2014 exceeded a target figure. Current estimates are that it is 85% probable that the management of Beta Company will achieve this target.

The individual statement of financial position of Beta Company at 1 April 2012 comprised net assets that had a fair value at that date of 2,400 million. Alpha Company also considered certain intangible assets that were not recognised in the individual statement of financial position of Beta Company. Customer relationships had a reliable estimated value of 200 million. This value has been derived from sale of customer databases in the past. Employee expertise had a reliable estimate of 80 million. An in-process research and development project with fair value estimated at 10 million that had not been recognised by Beta Company since the necessary conditions laid down in IFRS for capitalisation were only just satisfied on 1 April 2012.

Legal and professional fees associated with the acquisition of the shares of Beta Company were 2.4 million. This includes 400,000 relating to the cost of issuing shares. The directors of Alpha Company estimate that the cost of their time that can be fairly allocated to the acquisition is 200,000. This amount of 200,000 is not included in the legal and professional fees of 2.4 million.

The directors of Alpha Company are unsure how long the goodwill on acquisition of Beta Company would last but they thought that 10 years might be a prudent estimate of its useful economic life. However, they considered that the goodwill had not suffered any impairment up to 31 March 2013. The annual discount rate to use in any relevant calculations is 10%.

Required: Compute the goodwill on consolidation of Beta Company that will appear in the consolidated statement of financial position of Alpha Company at 31 March 2013. Make appropriate references to IFRS.