eBay 2013 Annual Report Download - page 105

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eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – The Company and Summary of Significant Accounting Policies
The Company
We are a global technology company that enables commerce through three reportable segments: Marketplaces, Payments and Enterprise.
Our Marketplaces segment includes our eBay.com platform and its localized counterparts and our other online trading platforms, such as our
online classifieds sites and StubHub. Our Payments segment is comprised of PayPal and Bill Me Later. Our Enterprise segment, which we
previously referred to as our GSI segment, consists of GSI Commerce, Inc. ("GSI"), which we acquired in the second quarter of 2011. The
results of our Enterprise segment have been included in our consolidated results of operations from the acquisition date.
We are required to comply with various regulations worldwide in order to operate our businesses, particularly our Payments business. We
also partner with banks and other financial institutions in order to offer our Payments services globally. Changes in regulations, non-compliance
with regulations or loss of key bank or financial institution partners could have a significant adverse impact on our ability to operate our
Payments business; therefore, we monitor these areas closely to mitigate potential adverse impacts.
When we refer to “we,” “our,” “us” or “eBay” in this document, we mean the current Delaware corporation (eBay Inc.) and its California
predecessor, as well as all of our consolidated subsidiaries.
Use of estimates
The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On
an ongoing basis, we evaluate our estimates, including those related to provisions for transaction and loan losses, legal contingencies, income
taxes, revenue recognition, stock-based compensation, goodwill and the recoverability of intangible assets. We base our estimates on historical
experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ from those
estimates.
Principles of consolidation and basis of presentation
The accompanying financial statements are consolidated and include the financial statements of eBay Inc., our wholly and majority-owned
subsidiaries and variable interest entities ("VIE") if we are the primary beneficiary. All intercompany balances and transactions have been
eliminated in consolidation. Minority interests are recorded as a noncontrolling interest. A qualitative approach is applied to assess the
consolidation requirement for VIEs. Investments in entities where we hold at least a 20% ownership interest and have the ability to exercise
significant influence, but not control, over the investee are accounted for using the equity method of accounting. For such investments, our share
of the investees' results of operations is included in interest and other, net and our investment balance is included in long-term investments.
Investments in entities where we hold less than a 20% ownership interest are generally accounted for using the cost method of accounting, and
our share of the investees' results of operations is included in our consolidated statement of income to the extent dividends are received.
We have evaluated all subsequent events through the date the financial statements were issued.
F-8