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That’s not how accounting works. There’s no such thing as a probabilistic liability.
by otterley 1y ago
That’s not how accounting works. There’s no such thing as a probabilistic liability.
- jacquesm 1y agoLet me introduce you to actuarial science: https://en.wikipedia.org/wiki/Actuarial_science https://en.wikipedia.org/wiki/Actuarial_science
- otterley 1y agoI’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 1y agoYes there is. See provisions and contingent liabilities.
- otterley 1y agoNeither 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 1y agoOh. 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"?