In an article that appeared in The Australian Financial Review on 11 December 2010 (‘Qantas filings damning of Rolls-Royce’, by Andrew Cleary), it was stated that:

Filings lodged with the Federal Court this week by Qantas against Rolls-Royce indicate that the relationship between the two companies isn’t as amicable as what they have displayed publicly. Qantas is claiming damages from Rolls-Royce for problems associated with the airline’s A380 fleet due to engine failures. Rolls-Royce has been accused of misleading and deceptive behaviour by Qantas over claims the engineering giant made regarding its 900 engines. DLA Phillips Fox partner Robert Crittenden said the legal action is a clear message to Rolls-Royce that if they don’t play ball, then there will be consequences. Qantas also has the option to make a claim under the Trade Practices Act if a resolution can’t be reached. Although Qantas passengers have been able to reach their destinations problems with A380s has brought a halt to selling last minute tickets which chief executive Alan Joyce describes as the cream on top.

REQUIRED

How should Qantas and Rolls-Royce respectively account for the above action?