Read the following information and answer the following question.

A and B are partners sharing profits equally. Average capital employed of the firm is ₹10,00,000. The normal rate of return is 11%. Salary to each partner for his service to be treated as a charge on profit- 30,000 per year. The asset of the firm excluding goodwill is 11,00,000 and liabilities 1,00,000. The profit of the firm is as follows-
₹1,60,000(2016)
₹1,40,000(2017)
₹2,70,000(2018)

What is the value of goodwill if calculated on the basis of capitalisation of super profit?

₹1,81,818

The correct answer is option 4- 1,81,818

Normal profit = Average capital employed x (Normal rate of return/100)
                     = 10,00,000*11/100
                     = 1,10,000

Average profit = Profits of year (2016 + 2017 + 2018)/Total no of years
Average profit = (1,60,000+1,40,000+2,70,000)/3
                        = 5,70,000/3
                        = ₹1,90,000

Average profit = 1,90,000- salary of both partners i.e., 60,000
                      = ₹1,30,000

Super profit = Average profit - Normal profit
                    = 1,30,000 - 1,10,000
                    = ₹20,000

Goodwill = Super profit x (100/ normal rate of return)
               = 20,000*100/11
               = ₹1,81,818.18