eBay 2009 Annual Report Download - page 94

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eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 — The Company and Summary of Significant Accounting Policies:
The Company
eBay Inc. (“eBay”) was incorporated in California in May 1996, and reincorporated in Delaware in April
1998. eBay’s purpose is to pioneer new communities around the world, built on commerce, sustained by trust,
and inspired by opportunity. eBay brings together millions of buyers and sellers every day on a local, national
and international basis through an array of websites. eBay provides online marketplaces for the sale of goods and
services and online payment services.
For the majority of the year ended December 31, 2009, we operated three primary business segments:
Marketplaces, Payments and Communications. Our Marketplaces segment provides the infrastructure to enable
global online commerce on a variety of platforms, including the traditional eBay.com platform, and our other
online platforms, such as our online classifieds businesses, our secondary tickets marketplace, StubHub, our
online shopping comparison website, Shopping.com, and our apartment listing service platform, Rent.com, as
well as our fixed price media marketplace (Half.com). Our Payments segment is comprised of payment solutions
PayPal (which enables individuals or businesses to securely, easily and quickly send and receive payments
online) and Bill Me Later (which we acquired in November 2008 and which enables online U.S. merchants to
offer, and U.S. consumers to obtain, transactional credit at the point of sale). Our Communications segment,
which consisted of Skype, enabled Internet communications between Skype users and provided low-cost
connectivity to traditional fixed-line and mobile telephones. On November 19, 2009, we completed the sale of
Skype to an investor group (please see further discussion under the heading “Note 4 — Sale of Skype” below).
Following the completion of the sale of Skype, we operated and continue to operate two primary business
segments: Marketplaces and Payments.
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 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 and the recoverability of goodwill and 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 and
our majority-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in
consolidation. We have evaluated all subsequent events through the date the financial statements were issued on
February 17, 2010.
The consolidated financial statements include 100% of the assets and liabilities of these majority-owned
subsidiaries and the ownership interests of minority investors are recorded as a noncontrolling interest.
Investments in private entities where we hold 20% or more but less than a 50% ownership interest and exercise
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