eBay 2015 Annual Report Download - page 81

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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. is a global commerce leader, including our Marketplace, StubHub and Classifieds platforms. Our
Marketplace platforms include our online marketplace located at www.ebay.com, its localized counterparts and
the eBay mobile apps. Our StubHub platforms include our online ticket platform located at www.stubhub.com
and the StubHub mobile apps. Our Classifieds platforms include a collection of brands such as Mobile.de, Kijiji,
Gumtree, Marktplaats, eBay Classifieds and others.
On July 17, 2015, we completed the distribution of 100% of the outstanding common stock of PayPal
Holdings, Inc. (“PayPal”) to our stockholders (the “Distribution”), pursuant to which PayPal became an
independent company. Beginning in the third quarter of 2015, PayPal’s financial results for periods prior to the
Distribution have been reflected in our consolidated statement of income, retrospectively, as discontinued
operations. Additionally, the related assets and liabilities associated with the discontinued operations in the prior
year consolidated balance sheet are classified as discontinued operations. Pursuant to the terms of the separation
and distribution agreement entered into between us and PayPal on June 26, 2015, upon Distribution, assets
related to the PayPal business were transferred to, and liabilities related to the PayPal business were retained or
assumed by, PayPal. See “Note 4 — Discontinued Operations” for additional information.
During the second quarter of 2015, our Board of Directors (“Board”) approved a plan to sell the businesses
underlying our former Enterprise segment (“Enterprise”). As a result, the Enterprise financial results were
reflected in our consolidated statement of income, retrospectively, as discontinued operations beginning in the
second quarter of 2015. On July 16, 2015, we signed a definitive agreement to sell Enterprise and on
November 2, 2015, the sale closed. As a result, the related assets and liabilities associated with the discontinued
operations in the prior year consolidated balance sheet are classified as discontinued operations. See “Note 4 —
Discontinued Operations” for additional information.
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, unless otherwise
expressly stated or the context otherwise requires.
Use of estimates
The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting
principles (“GAAP”) 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 losses, legal contingencies,
income taxes, revenue recognition, stock-based compensation, goodwill and the recoverability of 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 Inc.,
our wholly and majority-owned subsidiaries and variable interest entities (“VIE”) where we are the primary
beneficiary. All intercompany balances and transactions have been eliminated in consolidation. Minority interests
are recorded as a noncontrolling interest. A qualitative approach is applied to assess the consolidation
requirement for VIEs. Investments in entities where we hold at least a 20% ownership interest and have the
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