(1) Provide a short introduction. (2) Provide and explain the journal entries for the HighPG Ltd Step-up Bond from 1 January 2019 to 31 December 2021. Refer to the specific Australian accounting standards. (3) Provide and explain the journal entries for the HighPG Ltd Convertible Bond from 1 January 2019 to 31 December 2021. Refer to the specific Australian accounting standards. Assume the bond is converted at maturity. (4) Assuming a net profit (after interest and tax) of 10 MAUD, provide a forecast of the equity and liability sections of the Balance sheet as at 31 December 2019 for each bond. Based on the effects of these different options on the financial statements of High PG Ltd, provide a recommendation to the CFO and board of directors.

Assessment Detalls High PG Ltd is a production company with an average return on assets of 8.0% and an average cost of debt of 7.7%. The company needs to raise additional funds in a competitive market environment. The Balance Sheet shows the company is currently financed as follows: Equlty and Liablites Posttion AUD Current Liabilities Non-Current Liabilities $ 3,033,000 9,317,000 42,350,000 85,425,000 (28,475,000 56,950,000 Total Liabilities Share Capital Accumulated losses Total equity As the personal assistant of the CFO L. Winters, you have been asked to evaluate the following opportunities to acquire $15 million of new capital and to provide advice at the board of directors meeting on September 10th, 2018 PG Ltd Bond Instrument ssue size AUD 15million Issue Price Settlement date Maturity date 10000% 01-January-2019 31-December-2021 Or Convertible Bond AUD 15million Instrument ssue size ent Sett lement date 01-January-2019 Conversion rate 15million $1 shares at maturity Without the conversion feat ure, the bond would be priced the same as the corporate Bond