eBay 2001 Annual Report Download - page 72

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eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (CONTINUED)
Foreign currency
All of our foreign subsidiaries use the local currency of their respective countries as their functional
currency. Assets and liabilities are translated at exchange rates prevailing at the balance sheet dates.
Revenues, costs and expenses are translated into United States dollars at average exchange rates for the
period. Gains and losses resulting from translation are accumulated as a component of other
comprehensive income (loss).
Realized gains and losses from foreign currency transactions are recognized as a component of net
income as incurred.
Property and equipment
Property and equipment are stated at historical cost less accumulated depreciation. Depreciation and
amortization are computed using the straight-line method over the estimated useful lives of the assets,
generally Ñve years or less for equipment and furniture, and up to forty years for buildings and building
improvements.
Impairment of long-lived assets
We evaluate the recoverability of long-lived assets and recognize impairment charges in the event the
net book value of such assets exceeds the future undiscounted cash Öows attributed to such assets. Long-
lived assets include property and equipment, identiÑable intangible assets and goodwill. See ""Recent
Accounting Pronouncements.''
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. Intangible assets
include acquired customer lists, workforce, technological know how, covenants not to compete and
goodwill. Intangible assets are amortized over the periods we expect to beneÑt, which range from three to
Ñfteen years.
Environmental expenditures
As a result of our merger with ButterÑelds, we own real estate properties that are either used in our
business or leased to unrelated parties for various commercial uses. We have remediation responsibility for
certain environmental and structural deÑciencies. Liabilities are recorded when environmental assessments
are made, remediation obligations are probable, and the costs can be reasonably estimated. As of
December 31, 2000 and 2001, estimated liabilities of approximately $5.8 million are included within other
liabilities. 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.
Comprehensive income
Comprehensive income 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, unrealized and realized gains and losses on investments, and unrealized losses
on cash Öow hedges.
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