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?

I, II and III

I and II

II and III

III and IV