Comment by foxglacier
7 months ago
They probably have a good model for what percentage of those will never be redeemed so they wouldn't have to count the whole $2 billion as a liability. The OP's one big customer would be harder to predict the future behavior of.
That’s not how accounting works. There’s no such thing as a probabilistic liability.
Let me introduce you to actuarial science:
https://en.wikipedia.org/wiki/Actuarial_science
I’m aware of actuarial science, but what does that have to do with accounting? (We've been talking about liabilities as an accounting and contractual term, not as a remedy for injuries.)
Yes there is. See provisions and contingent liabilities.
Neither of these show up either on a balance sheet or cash flow statement. If a contingent liability is probable, you have to record it as a liability per GAAP.
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