Question

Access eBay's February 6, 2017, filing of its 10-K report for the year ended December 31, 2016, at SEC.gov
1.What is the amount of eBay's net accounts receivable at December 31, 2016, and at December 31,2015?
2. 'Financial Statement Schedule II" of it's 10-K report lists eBay's allowance for doubtful accounts (including authorized credits).For the two years ended December 31, 2016 and 2015, identify its allowance for doubtful accounts(including authorized credits), and then compute it as a percent of gross accounts receivable.
3.Do you believe that these percentages are reasonable based on what you know about eBay? Explain.

Taking it to the Net C1 P3Q BTN 7-3 Access eBay's February 6, 2017, filing of its 10-K report for the year ended December 31, 2016, at SEC.gov Q. Required 1. What is the amount of eBay's net accounts receivable at December 31, 2016, and at December 31, 2015? 2. “Financial Statement Schedule II” of its 10-K report lists eBay's allowance for doubtful accounts (including authorized credits). For the two years ended December 31, 2016 and 2015, identify its allowance for doubtful accounts (including authorized credits), and then compute it as a percent of gross accounts receivable. 3. Do you believe that these percentages are reasonable based on what you know about eBay? Explain. Page 334

Answer 1

1. E-bay's net accounts receivable was $592 million for year ended 31st December, 2016 and $619 million for year ended 31st December, 2015.

2. Allowance for doubtful accounts (including authorized credits) for year ended 31st December, 2016 was $81 million and $84 million for year ended 31st December, 2015.

Percentage of Gross Accounts Receivable :     Year ended 31st Dec, 2016 Year ended 31st Dec, 2015
Gross Accounts Receivable $673 million $703 million
Percentage of Allowance 12.04% 11.95%

3. Allowance for doubtful accounts is based upon assessment of various factors such as historical experience, the age of the accounts receivable balances, current economic conditions and other factors that may affect customers’ ability to pay.
Also, there isn't a significant variation in 2016 when compared to 2015 provisioning.
Hence, based on ebay's assessments of the above factors, the allowance seems appropriate.