The ABC Oil drilled $10$ wells last year, of which $3$ were dry holes. The cost of drilling was $$1$ million each well. The total amount of discovery was $2$ million bbl of oil. The company also sold $100,000$ bbl of oil at the price of $$100/$bbl$.$ Assume the cost of producing oil last year was $$4$ million and the tax rate of $35\%.$ Assume zero entries for beginning of year entries of assets, liabilities and equities.

a$.$ Calculate the company$$s total net income and assets under SE and FC accounting. Explain why these methods generate different results.

b$.$ Which method would generate more volatile income and asset values when there is an increasing amount of exploratory activities? Development activities? Why?