A Company with Convertible Bonds Outstanding Will Assume Hypothetical Conversion

A company with convertible bonds outstanding will assume hypothetical conversion at the earliest point of the year to compute diluted EPS. The numerator is ________.

A) increased by the interest paid on the bonds during the fiscal year
B) increased by the after-tax interest expense on the bonds for the fiscal year
C) decreased by the interest paid on the bonds during the fiscal year
D) decreased by the after-tax interest paid on the bonds during the fiscal year