By Parent color not honored when shading transparency is 0

Display mode - Shading settings - Color & material usage = Object’s color
For block objects with their color set to By Parent:
When Display mode - Shading settings - Transparency = 0, the faces are shaded per the objects’ layer’s color, not the parent’s color.
When Transparency > 0, By Parent color is honored.

Below, the polysurfaces are on the red layer and the polysurfaces’ color is set to By Parent.
The polysurface on the left is in a block instance on the green layer. The instance’s color is By Layer.
The polysurface on the right is a copy of the other block instance but with its color set to By Parent. The instance is nested in another block. That block instance is on the blue layer. The instance’s color is By Layer.

ByParentShadedTransparency.3dm (68.1 KB)

Thank you,