The Balance Sheets of Top Auto Ltd and its subsidiary Car Deal Ltd as at 30th November 2020 showed the following:

	Top Auto Ltd	Top Auto Ltd	Car Deal Ltd	Car Deal Ltd
	000	000	000	000
FIXED ASSETS
Land and Buildings		115,160		57,100
Investment in Car Deal Ltd		131,450
CURRENT ASSETS
Stock	90,510		74,100
Debtors	75,700		39,308
Bank	28,300		12,704
	194,510		126,112
LESS CURRENT LIABILITIES
Creditors	(39,090)		(25,700)	-
NET CURRENT ASSETS		155,420		100,412
		402,030		157,512
CAPITAL AND RESERVES
Share Capital 25p ordinary shares		200,000		125,000
Retained earnings at 1st December 2019	130,060		24,312
Retained earnings for year	71,970		8,200
		202,030		32,512
		402,030		157,512

You have been given the following additional information:

1. Top Auto Ltd bought its holding of 300,000 shares in Car Deal Ltd on 1st December 2019.

2. At the Balance Sheet date Car Deal Ltd owes Top Auto Ltd 3,040,000.
3. During the year Top Auto Ltd sold goods to Car Deal Ltd for 2,000,000 at cost plus a mark-up of 25%. 80% of these goods had been sold by Car Deal Ltd by 30 November 2020, and the remainder is reflected in the stock of Car Deal Ltd at the end of the year.

4. Goodwill should be amortised over 10 years.

Required

a) Prepare a Consolidated Balance Sheet for Top Auto Ltd and Car Deal Ltd as at 30^th November 2020.

[15 marks]

b) Briefly explain five reasons why companies purchase other companies.

(Maximum word count: 100 words)

[5 marks]

[Total: 20 marks]