eBay 2015 Annual Report Download - page 84

eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
We report a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected
to be taken in a tax return. We recognize interest and penalties, if any, related to unrecognized tax benefits in
income tax expense.
Cash and cash equivalents
Cash and cash equivalents are short-term, highly liquid investments with original maturities of three months
or less when purchased and are mainly comprised of bank deposits, certificates of deposit and commercial paper.
Allowance for doubtful accounts and authorized credits
We record our allowance for doubtful accounts based upon our assessment of various factors. We consider
historical experience, the age of the accounts receivable balances, current economic conditions and other factors
that may affect our customers’ ability to pay. The allowance for doubtful accounts and authorized credits was
$84 million and $86 million at December 31, 2015 and 2014, respectively.
Investments
Short-term investments, which may include marketable equity securities, time deposits, certificates of
deposit, government bonds and corporate debt securities with original maturities of greater than three months but
less than one year when purchased, are classified as available-for-sale and are reported at fair value using the
specific identification method. Unrealized gains and losses are excluded from earnings and reported as a
component of other comprehensive income (loss), net of related estimated tax provisions or benefits.
Long-term investments may include marketable government bonds and corporate debt securities, time
deposits, certificates of deposit and cost and equity method investments. Debt securities are classified as
available-for-sale and are reported at fair value using the specific identification method. Unrealized gains and
losses on our available-for-sale investments are excluded from earnings and reported as a component of other
comprehensive income (loss), net of related estimated tax provisions or benefits.
Certain time deposits are classified as held to maturity and recorded at amortized cost. Our equity method
investments are primarily investments in privately held companies. Our consolidated results of operations
include, as a component of interest and other, net, our share of the net income or loss of the equity method
investments. Our share of investees’ results of operations is not significant for any period presented. Our cost
method investments consist of investments in privately held companies and are recorded at cost. Amounts
received from our cost method investees were not material to any period presented.
We assess whether an other-than-temporary impairment loss on our investments has occurred due to
declines in fair value or other market conditions. With respect to our debt securities, this assessment takes into
account the severity and duration of the decline in value, our intent to sell the security, whether it is more likely
than not that we will be required to sell the security before recovery of its amortized cost basis, and whether we
expect to recover the entire amortized cost basis of the security (that is, whether a credit loss exists).
Property and equipment
Property and equipment are stated at historical cost less accumulated depreciation. Depreciation is computed
using the straight-line method over the estimated useful lives of the assets, generally, one to three years for
computer equipment and software, up to thirty years for buildings and building improvements, the shorter of five
years or the term of the lease for leasehold improvements and three years for furniture, fixtures and vehicles.
F-10