Fair Value Measurement of Assets and Liabilities

12 Months Ended

Dec. 31, 2013

Fair Value Disclosures [Abstract]

Fair Value Measurement of Assets and Liabilities

Fair Value Measurement of Assets and Liabilities

The following tables summarize our financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2013 and 2012:

Description	Balance as of December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
	(In millions)
Assets:
Cash and cash equivalents	$	4,494	$	4,159	$	335
Short-term investments:
Restricted cash	17		17		—
Corporate debt securities	3,529		—		3,529
Government and agency securities	43		—		43
Time deposits	49		—		49
Equity instruments	893		893		—
Total short-term investments	4,531		910		3,621
Funds receivable and customer accounts	3,563		—		3,563
Derivatives	44		—		44
Long-term investments:
Corporate debt securities	4,445		—		4,445
Government and agency securities	251		—		251
Total long-term investments	4,696		—		4,696
Total financial assets	$	17,328	$	5,069	$	12,259
Liabilities:
Derivatives	$	151	$	—	$	151

Description	Balance as of December 31, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
	(In millions)
Assets:
Cash and cash equivalents	$	6,817	$	5,685	$	1,132
Short-term investments:
Restricted cash	15		15		—
Corporate debt securities	1,153		—		1,153
Government and agency securities	20		—		20
Time deposits	765		—		765
Equity instruments	638		638		—
Total short-term investments	2,591		653		1,938
Derivatives	55		—		55
Long-term investments:
Corporate debt securities	2,669		—		2,669
Government and agency securities	42		—		42
Total long-term investments	2,711		—		2,711
Total financial assets	$	12,174	$	6,338	$	5,836
Liabilities:
Derivatives	$	86	$	—	$	86

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 may have a duration of up to 18 months. We did not have any transfers of financial instruments between valuation levels during 2013 or 2012.

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 had total funds receivable and customer accounts of $9.3 billion as of December 31, 2013, $3.6 billion of which is invested in short-term investments.

In addition, we had cost and equity method investments of approximately $269 million and $327 million included in long-term investments on our consolidated balance sheet at December 31, 2013 and 2012, respectively.

As of December 31, 2013 and 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, accounts payable, funds receivable, certain customer accounts, 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.