eBay 2000 Annual Report Download - page 66

eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
in the event the net book value of such assets exceeds the future undiscounted cash Öows attributable to such
assets.
Intangible assets
Intangible assets resulting from the acquisitions of entities accounted for using the purchase method of
accounting are estimated by management based on the fair value of assets received. These include acquired
customer lists, workforce, technological know how, covenants not to compete and goodwill. During the year
ended December 31, 2000, a subsidiary of eBay purchased the technology and related workforce from the
Precision Buying Service, a division of Deja.com, in which eBay recorded an intangible asset of approximately
$5.9 million. Intangible assets are amortized from eight months to ten years on a straight-line basis which
represents the estimated periods of beneÑt.
Environmental expenditures
eBay owns or controls real estate properties that are either used in the auction business or leased to
unrelated parties for various commercial applications. Certain environmental and structural deÑciencies have
been identiÑed in the past for which eBay has remediation responsibility. The amounts accrued to correct
these matters are based upon estimates developed in preliminary studies by external consultants. Due to
uncertainties inherent in the estimation process, the amounts accrued for these matters may be revised in
future periods as additional information is obtained.
Environmental expenditures that relate to an existing condition caused by past operations, and that do not
contribute to current or future revenue generation, are charged to expense. Liabilities are recorded when
environmental assessments are made, remediation obligations are probable and the costs can be reasonably
estimated. The timing of these accruals is generally upon the completion of feasibility studies. As of
December 31, 1999 and 2000, estimated liabilities of approximately $5.8 million are included within other
liabilities.
Comprehensive income
eBay accounts for comprehensive income in accordance with SFAS No. 130, ""Reporting Comprehensive
Income.'' SFAS No. 130 establishes standards for reporting comprehensive income and its components in
Ñnancial statements. Comprehensive income, as deÑned, includes all changes in equity (net assets) during a
period from non-owner sources. The change in comprehensive income for all periods presented resulted from
foreign currency translation gains and losses and unrealized gains and losses on securities.
Revenue recognition
Online transaction revenues are derived primarily from placement fees charged for the listing of items on
the eBay website, success fees calculated as a percentage of the Ñnal sales transaction value for both eBay and
Half.com, and to a lesser extent, online advertising.
Listing and featured item fee revenue is recognized ratably over the estimated period of the auction while
revenues related to success fees are recognized at the time that the transaction is successfully concluded. A
transaction is considered successfully concluded when at least one buyer has bid above the seller's speciÑed
minimum price or reserve price, whichever is higher, at the end of the transaction term. Advertising revenues,
which are principally derived from the sale of banners or sponsorship on the eBay site, are recognized as the
impressions are delivered, or ratably over the term of the agreement where such agreements provide for
minimum monthly or quarterly advertising commitments or such commitments are Ñxed throughout the term.
Provisions for doubtful accounts and authorized credits to sellers are made at the time of revenue recognition
based upon our historical experience.
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