CRA finds that a switch to computing earnings for surplus purposes under Canadian principles does not result in doubling-up deductions

Suppose that a foreign affiliate ceases to be required to compute its income under local taxation laws so that it becomes required to start computing its earnings for surplus purposes under Canadian principles (under Reg. 5907(1) - "earnings" - (a)(iii)).  Would this mean, for example, that an asset which already had been fully depreciated under the local income tax laws under the old system would now have to be depreciated a second time under Canadian principles?  Although there is some ambiguity in draft Reg. 5907(2.03) on the point, CRA apparently considers that in this situation, no such catch-up deductions would be required.

Neal Armstrong.  Summary of 22 January 2013 T.I. 2012-0460121E5 under Reg. 5907(2.03).