The problem with this argument has always been that the answers are clear to people with some business experience.
"Do you count the full price of the deal as revenue?"
Gross revenue? Sure. Net revenue? Of course not.
"Or do you count only Groupon's cut of the deal as revenue?"
Yes, as net revenue. Of course. Same as any marketing/advertising company.
"How often should they pay out the merchants?"
As slowly as possible, from Groupon's perspective. What was so amazing here was they essentially built an ad network where the inventory suppliers had zero power over the scenario and accepted unfavorable payment terms. Instead of getting paid net 30, they accepted net 90 or worse.
"How do you account for refunds?"
As credits to the expense account where the original purchase was posted, just like with any other business.
"Where do you keep the reserve pools GRoupon needed to pay out all those refunds?"
You don't have to keep it anywhere because they get marked as credits to the expense account. There's no need for a pool or any other sort of artifice. Creating a pool makes sense only to cloud what's going on.
"Are the reserve pools considered an asset?"
Of course not. But why do we have a pool again?
"Or a liability?"
Of course.
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Groupon did a lot of brilliant things. One of the smartest was realizing that though their model was no different from any other sort of ad network, since it wasn't immediately obvious to outsiders, and since their suppliers had so little power, they could make up new accounting rules and principles to generate favorable cash flows.
I don't write this to say this was wrong. It was brilliant. I want to disagree with the idea that they HAD to do this. They could have paid out net 30 and counted refunds like any other business, but they realized they could get away with not doing this for some time, and ran with it.