Dither Co Owns 100% of the Common Shares of Franklin Ltd

Multiple Choice

Dither Co. owns 100% of the common shares of Franklin Ltd. Dither records its investment in Franklin using the cost method. Dither and Franklin have transactions with each other. In preparing Dither's consolidated financial statements, which of the following should be done?

A) Dividends received by Dither from Franklin should be deducted from Dither's dividend income.
B) Franklin's retained earnings should be deducted from Dither's retained earnings.
C) Dither's receivable from Franklin should be netted with Dither's accounts receivable.
D) Franklin's share capital should be added to Dither's share capital.