CFAI text Institutional Investors: R20 question 3A:Decline in pension surplus

Hi guys! Need help with the CFAI text R20 question 3A. Decline in pension surplus. The solution in the text is very hazy. Could someone please explain the solution to this question? Thanx a million.

So basically, duration of liabilities = duration of the long-term bonds = 10. Interest rates have decreased. Performance of liabilities will be the same as the performance of long-term bonds (remember they have same duration). Long-term bonds have increased by 12%. 7% is income generation, so we ignore that. This means, our liabilities have also increased by 12%. Meanwhile, assets have increased only by 10%. Hence, decrease in surplus. Also, decline in interest rates translated into lower discount rates, meaning, value of bonds is higher. Hope that helped.