FA-Physical Inventory & Retirement types

hi,

1-In FA (categories) there is a box for physical inventory,

as per my understanding, you use it (tick box) only if you want assets to move to inventory module that are no longer in use etc, But there is no direct interface b/w FA and inventory?

OR

- From purely FA point of view, if the box is ticked, and A inventory is setup (physical inventory form), then oracle will just keep a record of Assets with their details i.e. status etc.?

trying to undertand as to what is the main use and affect of this option in FA?