eBay 2012 Annual Report Download - page 116

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eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Our financial assets and liabilities are valued using market prices on both active markets (level 1) and less active markets (level 2). Level 1
instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets. Level 2
instrument valuations are obtained from readily available pricing sources for comparable instruments, identical instruments in less active
markets, or models using market observable inputs. The majority of our derivative instruments are valued using pricing models that take into
account the contract terms as well as multiple inputs where applicable, such as equity prices, interest rate yield curves, option volatility and
currency rates. Our derivative instruments are primarily short-term in nature, generally one month to one year in duration. Certain foreign
currency contracts designated as cash flow hedges extend to 18 months in duration. Cash and cash equivalents are short-term, highly liquid
investments with original or remaining maturities of three months or less when purchased and are comprised primarily of bank deposits, money
market funds, and commercial paper. We did not have any transfers of financial instruments between valuation levels during 2012 and 2011.
In addition to the long-term investments noted above, we had approximately $327 million and $190 million of cost and equity method
investments included in long-term investments on our consolidated balance sheet at December 31, 2012 and 2011 , respectively.
As of December 31, 2012 , we held no direct investments in auction rate securities, collateralized debt obligations, structured investment
vehicles or mortgage-backed securities.
Other financial instruments, including accounts receivable, loans and interest receivable, funds receivable, customer accounts, short-term
debt, accounts payable, funds payable and amounts due to customers are carried at cost, which approximates their fair value because of the short-
term nature of these instruments.
F-23
Description
Balance as of
December 31, 2011
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
(In millions)
Assets:
Cash and cash equivalents
$
4,691
$
4,691
$
—
Short-term investments:
Restricted cash
19
19
—
Corporate debt securities
449
—
449
Government and agency securities
42
—
42
Time deposits
82
—
82
Equity instruments
646
646
—
Total short-term investments
1,238
665
573
Derivatives
112
—
112
Long-term investments:
Restricted cash
1
1
—
Corporate debt securities
2,186
—
2,186
Government and agency securities
71
—
71
Total long-term investments
2,258
1
2,257
Total financial assets
$
8,299
$
5,357
$
2,942
Liabilities:
Derivatives
$
60
$
—
$
60