When computing diluted earnings per share, convertible bonds are

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Convertible bonds are assumed converted only if they are dilutive when computing diluted earnings per share. This means that if the conversion of the bonds would increase the number of shares outstanding and reduce the earnings per share, then they are considered dilutive and assumed converted. If conversion of the bonds would have no significant effect or would increase earnings per share, then they are considered antidilutive and not assumed converted. Ignoring them completely would not be an accurate representation of their potential dilutive effect on earnings per share. Antidilutive securities are not included in the computation of diluted earnings per share.

When Computing Diluted Earnings Per Share, Convertible Bonds Are