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Do I record a vacation liability if the company offers unlimited vacation?

From a U.S. GAAP and financial statement perspective, a company would likely go to an unlimited PTO/vacation policy to avoid vacation expense in the income statement and to avoid the cash cost for having to pay employees for an accrued vacation. When a company has to pay an employee for any unused vacation, the company would be required to record a liability on the balance sheet as there is a potential cash outflow in the future.


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