For example, Bar Co. purchases a land for constructing a warehouse. On the land, there is a ruined old mansion. In order to use the land for its intended use, the ruined old mansion must be removed and the land must be cleared for construction. The cost of removing and clearing operations must also be added to the cost of land. After the removal, the debris were sold. The receipt will be a reduction in the cost of the land. Bar Co. installs paving from and to the warehouse. Also, installs signs and street lights. These installments are not included in the cost of the land. These type of separate long-lived assets are called land improvements.

Land improvements are structural additions made to land, such as driveways, parking lots, fences, landscaping, and underground sprinklers.

As can also be understood from the information given, “The cost of clearing the land and removing unwanted buildings” must be added to the cost of land. The installments such as such as driveways, parking lots, fences, landscaping, and underground sprinklers.are not included in the cost of the land, so the correct answer is E.