Here is what I have done so far and I just got lost on the last portion. Please take a look and let me know Thank you!

http://oi50.tinypic.com/2cxxnd1.jpg

Your journal entries are correct.

For 2011 you need to get the remaining book value of the machine. So take your cost of machine minus your accumulated depreciaiton(4 yrs worth of depreciation expense) to get your remaining book value. Next subtract your salvage value to get your depreciable base. Finally divide your depreciable base by your remaining useful life to get your depreciation amount per year.

Now you can make your journal entries for 2011.

So if I understand correctly we will use the following numbes based on your response? Doesn't make sens still or maybe I'm off. Please correct me if I'm wrong.

Thanks a lot for your help I really Appreciate it.

$90,000 - $20,000 = $70,000 - $18,000 = $52,000 /12Years = ?

Your remaining book value is $90,000 - $24,000 accumulated depreciation = $66,000 - $18,000 salvage value = $48,000 new depreciable base.

Remaining useful life is 20 years - 4 years used = 16 years.

$3,000 it is :) Thank you so much for all your help again.