Entity A granted 630,000 share appreciation rights (SAR) to Sam Lam and Danny Li, the new chief executive officer (CEO) and the new chief operation officer (COO), who started work in Entity A on 1 January 2015. The allocation of the SARS between Sam and Danny is 76% and 24% respectively. The SAR scheme entitles them to receive cash on the exercise date for the difference between the market price of the share and the pre-established price, i.e. $12.00 of the SAR. The SAR scheme contains two conditions. The first condition is that Sam and Danny must work for the company for three years. A second condition for vesting is that they are responsible for increasing the profit level by 10.00% per annum or at least 30.00% over the three years. On 31 December 2015, Entity A's profit level increased by 13.00% and therefore the board of directors estimated that the performance condition will be achieved in the coming future. For the year 2016, the profit level increased by 2.00% only. At 6:00 PM on 31 December 2016, an urgent board meeting was scheduled for discussion on this issue. After the meeting, the board of directors concluded that the board still supported Sam and Danny and believed that the final target will be achieved by 31 December 2017. However, Danny was a l s a lack of confidence and decided to resign. He informed Peter Chan, the chairperson of Entity A through an email at 10:30 PM on 31 December 2016. Peter read his email at 11:00 PM and felt very angry. After 45 minutes, Danny received the replied email from Peter for accepting his resignation. On 31 December 2017, the profit level target was measured and it was increased by 35.00% over the three years. On the grant date, the market share price is $25.00 and the fair value of the SAR is $13.00. The market share prices on 31 December 2015, 2016, 2017, 2018, 2019, and 2020 are $32.00, $34.00, $24.00, $42.00, $25.00 and $39.00 respectively. Sam exercises the SARS by 210,000, 160,000 and the remaining amount at the end of the years 2018, 2019 and 2020 respectively. REQUIRED: Prepare all journal entries for the share-based payments in books of Entity A for the years of 2017, 2018 and 2019 under the HKFRS 2 Share-based Payments. Based on PART ONE Question 1, you are required to provide explanations under HKFRS 2 Share- based Payments. REQUIRED: What is the accounting treatment of the share appreciation rights (SAR) issued by Entity A? Explain in detail. (2 Marks)