eBay 2001 Annual Report Download - page 70

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eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 Ì The Company and Summary of SigniÑcant Accounting Policies:
The Company
eBay Inc. (""eBay'') was incorporated in California in May 1996, and reincorporated in Delaware in
April 1998. As of December 31, 2001, we had websites directed towards the United States, Australia,
Austria, Belgium, Canada, France, Germany, Ireland, Italy, Japan, the Netherlands, New Zealand,
Singapore, South Korea, Spain, Sweden, Switzerland and the United Kingdom. We pioneered online
trading by developing a Web-based community in which buyers and sellers are brought together to buy
and sell almost anything. The eBay online service permits sellers to list items for sale, buyers to bid on
items of interest, and all eBay users to browse through listed items in a fully-automated, topically-arranged
service that is available online seven days a week.
Stock splits
In January 1999, our Board of Directors approved a three-for-one common stock split, and in April
2000, approved a two-for-one common stock split. Stockholders of record on February 9, 1999, received
two additional shares on March 1, 1999. Stockholders of record on May 9, 2000, received one additional
share for each share owned on May 24, 2000. All share and per share amounts in these consolidated
Ñnancial statements and related notes reÖect the stock splits in all periods presented.
Use of estimates
The preparation of consolidated Ñnancial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that aÅect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated
Ñnancial statements and the reported amounts of revenues and expenses during the reporting period.
Actual results could diÅer from those estimates.
Principles of consolidation and basis of presentation
The accompanying Ñnancial statements are consolidated and include the Ñnancial statements of eBay
and our majority-owned subsidiaries. All signiÑcant intercompany balances and transactions have been
eliminated in consolidation. Certain prior period balances have been reclassiÑed to conform to the current
period presentation.
Investments in aÇliates and general partnerships
General partnerships in which we hold more than a 50 percent ownership interest are consolidated.
The consolidated accounts include 100 percent of the assets and liabilities of these general partnerships,
and the ownership interests of minority investors are recorded as minority interests. Investments in entities
and general partnerships where we hold more than a 20 percent but less than a 50 percent ownership
interest and have the ability to signiÑcantly inÖuence the operations of the investee are accounted for using
the equity method of accounting and are included in other assets.
Investments by third parties in the stock of our subsidiaries are evaluated for their impact on the
carrying amount of our interest at the date the investments are made. To the extent the proceeds from
these investments diÅer from the carrying amount of the third-party's ownership interest in the net equity
of the subsidiary, the diÅerences are recognized as a component of stockholders' equity.
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