[foxglacier]

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.

[otterley]

That’s not how accounting works. There’s no such thing as a probabilistic liability.

[jacquesm]

Let me introduce you to actuarial science:

https://en.wikipedia.org/wiki/Actuarial_science

[otterley]

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.)

[foxglacier]

Yes there is. See provisions and contingent liabilities.

[otterley]

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.

[foxglacier]

Oh. Then what's the effect of the growing pile of unredeemed non-expiring gift vouchers that companies issue? Is there a little asterisk next to liabilities saying "but don't worry, we're sure we'll never have to pay this"?