A Katie Tucker new staff accountant at Bartley, Sullivan and Sheehan CPA is preparing the calculation of diluted earnings per share for her new client. She suddenly becomes concerned because the assumed converted calculation for convertible bonds to common stock increase earnings per share. Something doesn't seem correct, Katie needs to determine the proper presentation for this impact to earnings per share.

REQUIRED: Cite specific FASB authoritative references to advise Katie regarding the proper accounting and presentation.