When applying the if-converted assumption, the company assumes conversion at the beginning of the year for a convertible bond or convertible preferred stock outstanding at the beginning of the year.

Question

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The if-converted assumption is used in calculating diluted earnings per share, assuming that convertible securities are converted into common stock at the beginning of the year or at the time of issuance if issued during the year.

When Applying the If-Converted Assumption, the Company Assumes Conversion at the Beginning