Evaluate Whether the Following Situations Will Give Rise to a Present

question 78

Multiple Choice

Evaluate whether the following situations will give rise to a present obligation:
I: Bona Bay Ltd is a large manufacturer of surfboards and provides a two year warranty for all its products from the time of purchase by offering to repair or replace the item.
II: Sea Eagle Ltd operates its offshore oil rigs near Curlew Beach.During the reporting period,there was a major oil spill and the company had publicly announced to undertake clean-up of all the contamination that it caused.There is no environmental legislation on oil spills.
III: A customer sued Neck Bay Ltd for damages from a faulty product.The company hired a legal team to dispute this claim.
IV:
Whitehaven Ltd had guaranteed a bank loan to an associated company.
In compliance with AASB 137 Provisions,Contingent Liabilities and Contingent Assets,which of the above situations requires recognition in the financial statements?

• A) I, II and III
• B) I and II
• C) II and III
• D) III and IV

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Definitions:

Observed Responses

Observed responses refer to the actual outcomes or reactions recorded in an experiment or survey, following exposure to certain conditions or stimuli.

Linear Regression

A statistical method for modeling the relationship between a dependent variable and one or more independent variables by fitting a linear equation.

Standard Deviation

A measure of the dispersion or spread of a set of data points relative to their mean, showing how much variation exists.

Response Variable

The outcome variable that researchers aim to predict or explain through statistical models, observed in an experiment or study.