MLR operates a defined benefit pension plan for all of its employees. On 10 December 20X2 improvements were made to the pension plan in respect of the pension rights of members.

At that date, the actuary estimated that the present value of these improvements was $5 million. MLR paid $5 million to the pension plan in January 20X3. The actuary informed MLR that the present value of the plan liabilities was $15 million as at 31 December 20X2 and the fair value of plan assets was $12 million at that date.

Required:

(i) Explain what MLR will include in its statement of financial position as at 31 December 20X2 in respect of its pension plan.

(ii) Explain how MLR should account for the cost of the improvements to the plan in its financial statements for the year ended 31 December 20X2.