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 2017 Sienna sold land to Pale at a recorded loss of $300,000. Pale still owns the land at year-end 2017.

Pales ending inventory at year-end 2017 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 1/3/2014, 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 12/31/2017.

When would the loss on the Sierra sale of land to Pale be reported in the consolidated income statement?

a) In 2017

b) In 2018

c) Never. It is simply an intercompany transaction that on a consolidated basis did not happen.

d) Whenever the loss is confirmed through the sale to an unrelated party