Question

Taking it to the Net C1 P3 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

Requirement (1)

	($ in Millions)
	Dec 31 2016	Dec 31 2015
Accounts Receivable. Net	592	619

Requirement (2)
Identification of Doubtful accounts (including authorized credits)

	($ in Millions)
	Dec 31 2016	Dec 31 2015
Doubtful accounts (including authorized credits)	81	84

Computation of Doubtful accounts as a % of gross accounts receivables:

	($ in Millions)
	Dec 31 2016	Dec 31 2015
Accounts Receivable, Net	592	619
Doubtful accounts (including authorized credits)	81	84
Therefore, Accounts Receivable, Gross	673	703
Doubtful accounts as a % of gross accounts receivables	12.04%	11.95%
(Doubtful accounts / Accounts Receivable, Gross) * 100

Requirement (3):
Based on the three year schedule provided in the 10-K report of the year 2016, it is clearly seen that roughly 85% - 90% of the opening amount in the reserve is written off during the year and charged to the Income statement.
Further, as per the past 5 years records, the similar stands true even currently.
Therefore, the % of doubtful accounts created and disclosed in the books are more than sufficient.