Final answer:
Land improvements on a company's balance sheet typically include permanent enhancements like sidewalks, shade trees, and fences that contribute to property value or usability. Equipment like backhoes and inventory items like trees for sale in a landscaping business do not count as land improvements.
Step-by-step explanation:
Land improvements reported on a company's balance sheet might include various physical alterations made to the environment in order to enhance its value, usability and appearance. These improvements are typically durable and provide benefits to a company over multiple years, which is why they are capitalized on the balance sheet rather than expensed immediately.
- Sidewalks outside the corporate headquarters are an example of land improvements as they are a permanent enhancement and provide lasting benefit to the property.
- Trees planted to provide shade for the customer parking lot also count as land improvements; they are intended to enhance the parking lot's usability and aesthetics.
- The fence around a factory parking lot is considered a land improvement because it is a addition that likely improves security and increases the property's value.
The other options listed do not meet the criteria for land improvements on a balance sheet:
- A backhoe that a contractor uses to dig foundations is part of equipment rather than a land improvement, because it is a movable asset that does not provide a permanent enhancement to the property.
- Trees available for sale in a landscaping business are part of inventory and not land improvements since they are held for sale and not intended to enhance the value or functionality of the company's property.