What is the right course of action?

You got it right. Here’s why: The “yield” (give way) sign on your road means you must let cross-traffic go first. The motorcycle is coming from the left and has no sign, so you must let them pass. The bus is approaching from the opposite direction and wants to turn left across your lane, so it must yield to you because you are going straight and you’re to its right (right-before-left still applies after yielding at the give way). So, you should let the motorcycle go, then go before the bus. That’s why both “I have to allow the motorcycle to pass through” and “I take priority before the bus” are correct. This rule helps in intersections with yield signs and vehicles coming from several directions.