The employer I worked for operated under one of the 2 systems allowed by New Zealand law. Leave is accrued as a percentage of hours worked. Overtime and penal rates could have one of two effects. Either the hourly rate payed out when on leave was increased, or the amount of leave you got increased as you did more shifts, call etc. They did the latter. The odd bit was that you earned leave while on leave (which I supposed has to happen). So after I was paid out when I left, I wrote to them and asked if the 3 months leave owed entitled me to an extra percentage as I'd have earned leave while on leave had I taken it. They paid me. So I wrote again, and they paid me again. Obviously this had rapidly decreasing returns, but it struck me as rather funny.

Companies allocate money into a contra account (to the leave liability) each period (i.e. monthly) so that its all "accounting money". Otherwise companies would go bankrupt if too many staff took leave at a time.

That is while staff with large leave balances look bad, they don't effect the profitability of the organisation.

In that case there is something I don't understand. If the company has a debt and an offsetting asset pegged specifically to that use, why does it look bad?

If anything, that should look good: "we owe $X to employees at 0bps interest and we have $X in the bank at 40bps."

It looks bad because they have a large liability on there balance sheet. Also you have to remember that your leave entitlement stays the same if you get promoted/ pay rise so the organisation actually has to pay more then what they've offset