Pale Company owns 80% of Sienna Co. The excess of acquisition cost was entirely attributed to previously unrecorded intangibles. For FYE 2017, Sienna reported net income of $7,000,000 and declared and paid dividends of $2,000,000. Amortization of the previously unrecorded intangible assets for 2017 is $1,750,000. Also, consider the following: In 2019 Sienna sold land to Pale at a recorded loss of $300,000. Pale still owns the land at year-end 2019. Pales ending inventory at year-end 2019 included merchandise acquired from Sienna. The unconfirmed profit on the inventory was $600,000. Pales ending inventory at the previous year-end included merchandise acquired from Sienna. The unconfirmed profit on that inventory was $350,000. On 1/3/2018, Pale sold equipment to Sienna at a gain of $1,000,000. At the time of the sale, the remaining life of this equipment was 10 years (straight-line). Sienna still holds the equipment at 12/31/2019. Use this data to answer questions 1-5. All data is relevant.

What is Pales equity in income of Sierra for 2019 after considering the effects of intercompany transactions and the revaluation write-off of previously unreported intangible assets?

a. $5,500,000

b. 4,420,000

c. $5,800,000

d. 4,180,000