Question # 4

On 1 July 2018, BHP Ltd of Australia has investments in two associates at 33.33% control (Cerrelon Ltd of Colombia and Antamina of Peru) and one joint venture at 50% control (Samarco Ltd of Brazil) with total equity accounted carrying amount of investments of $2,585 million.

• For the year ending 30 June 2019: Cerrelon Ltd recorded an after-tax profit of $180,000 and declared a dividend of $60,000 whereas Antamina Ltd recorded an after-tax profit of $120,000 and declared a dividend of $30,000 from profits earned in the 20182019 financial year.
• In October 2019 both Cerrelon Ltd and Antamina Ltd paid their dividend declared on 30 June 2019.
• For the year ending 30 June 2020: Due to the effect of COVID pandemic, Cerrelon Ltd recorded an after-tax loss of $30,000 and Antamina Ltd recorded an after-tax loss of $30,000. On 30 June 2020, Samarco of Brazil Ltd declares dividends of $20,000, to be paid out of the profits earned in the 2019 financial year.
• On 30 June 2020, Samarco of Brazil Ltd revalued its land upwards by an amount of $500,000.
• BHP Ltd recognises dividends as revenue and dividend receivable when its associates and joint ventures declare the dividends.
• The corporate tax rate for BHP Ltd is 30 per cent.