Hello, I was hoping for some assistance on "diluted earnings per share". Specifically, dealing with convertible securities that have been partially exercised throughout the year. For example, the question asks,

"There were $3,000,000, 8% of convertible bonds payable outstanding at the beginning of 2010, convertible into Class A Common Shares at a rate of 30 shares per $1000 bond, at the option of the investor. On August 31st, $1,000,000 bonds were converted under the terms of the conversion entitlement. Premium amortization on the bonds for the year totalled $53,334, of which $40,000 related to the period Jan.1st- August 31, 2010."

Also:

"At the beginning of 2010, 200,000 options were outstanding, allowing employees to purchase 200,000 Class A Common Shares at $6 per share. On September 1st, 2010, 60,000 of the options were exercised, when the market value of the Class A Common Shares was $19 per share. The average price of the Class A Common Shares for the first eight months was $15 per share. The remaining options are still outstanding and will expire in 2015. The average market price of Class A common shares throughout the year was $22 per share."

I have already accounted for the partial conversion of these securities for my W.A.S.O. for my basic EPS, however, I am bit confused as how to treat these partial conversions for determining my diluted EPS, mainly, in finding my incremental EPS for each convertible security and seeing the "share" and "income" effects of these securities.

Thanks for your help.