How to rename files within subfolder to the parent directory and retain file extension - Powershell

I'm having issues running a loop which allows files within subfolders to be name from its parent directory. My current file structure is as follows:

C:\test data
      Folder 1 [4k]
          12345676.txt
          35234443.mp4
          23432234.avi
      Folder 2 [4k]
          56859522.txt
          35234443.mp4
          23432234.avi

The desired end-result.

C:\test data
      Folder 1
         Folder 1.txt
         Folder 1.mp4
         Folder 1.avi
      Folder 2
         Folder 2.txt
         Folder 2.mp4
         Folder 2.avi

Here is my code which I'm trying to modify

$path = "C:\test data" 

Get-ChildItem $path -Directory | Foreach-Object { 

$file = $_.Fullname
$file = $file -replace ('4K','')
$file = $file -replace ('\s+\[]','')

Write-Output $file

rename-Item -LiteralPath $_.FullName -NewName $file

Get-ChildItem $path
} 

### Rename files in Subfolders 
Get-ChildItem $path -Recurse -File | Foreach-Object { 
    Rename-Item -LiteralPath $_.FullName -NewName 
    ($_.Directory.name) -ErrorAction SilentlyContinue
} 

The script changes the name of the file but does not retain the extension.

C:\test data
      Folder 1
          Folder 1 (file)
          Folder 1 (file)
          Folder 1 (file)
      Folder 2
          Folder 2 (file)
          Folder 2 (file)
          Folder 2 (file)

Any information would be of great help since I'm still learning how to code in Powershell.