What does the Fixed Asset Cycle calculate when disposing of an asset?

The Fixed Asset Cycle is designed to manage the lifecycle of fixed assets, which includes acquisition, depreciation, revaluation, and disposal. When disposing of an asset, one of the crucial calculations involves determining the financial impact of that disposal, specifically whether there is a gain or loss associated with the transaction.

When an asset is disposed of, the gain or loss is calculated by comparing the asset's book value at the time of disposal with the proceeds received from the sale or the residual value if it is simply written off. If the proceeds exceed the book value, a gain is recorded; if they are less, a loss is recorded. This information is vital for accurately reflecting the company's financial position and performance, as it affects both the income statement and balance sheet.

Other options do not pertain directly to the calculation that takes place upon disposal of an asset. For instance, a transaction summary relates to a record of transactions but does not capture the financial impact such as gains or losses. The depreciation schedule provides information about how much the asset has depreciated over time but is not concerned with disposal specifics. Employee records are unrelated to fixed asset management and disposal calculations altogether. Thus, the focus on calculating gain or loss makes this option the correct choice.