At the balance sheet date, an airline’s passengers have accumulated 20 million frequent flyer miles, which could be exchanged for about 1,000 “free”domestic round-trip tickets. Similar tickets are sold at an average price of $600, and the company incurs an incremental cost of about $200 for each passenger carried.

Management believes that about 75% of these tickets will ultimately be issued.

What dollar amount of liability would you recognize in this case? LOP9