diff --git a/compiler/fir/providers/src/org/jetbrains/kotlin/fir/CopyUtils.kt b/compiler/fir/providers/src/org/jetbrains/kotlin/fir/CopyUtils.kt
index aed3244e4cd..45ced0bc38f 100644
--- a/compiler/fir/providers/src/org/jetbrains/kotlin/fir/CopyUtils.kt
+++ b/compiler/fir/providers/src/org/jetbrains/kotlin/fir/CopyUtils.kt
@@ -73,6 +73,7 @@ fun List<FirAnnotation>.computeTypeAttributes(
     session: FirSession,
     predefined: List<ConeAttribute<*>> = emptyList(),
     containerDeclaration: FirDeclaration? = null,
+    allowExtensionFunctionType: Boolean = true,
     shouldExpandTypeAliases: Boolean
 ): ConeAttributes {
     if (this.isEmpty()) {
@@ -90,7 +91,9 @@ fun List<FirAnnotation>.computeTypeAttributes(
         when (classId) {
             CompilerConeAttributes.Exact.ANNOTATION_CLASS_ID -> attributes += CompilerConeAttributes.Exact
             CompilerConeAttributes.NoInfer.ANNOTATION_CLASS_ID -> attributes += CompilerConeAttributes.NoInfer
-            CompilerConeAttributes.ExtensionFunctionType.ANNOTATION_CLASS_ID -> attributes += CompilerConeAttributes.ExtensionFunctionType
+            CompilerConeAttributes.ExtensionFunctionType.ANNOTATION_CLASS_ID -> when {
+                allowExtensionFunctionType -> attributes += CompilerConeAttributes.ExtensionFunctionType
+            }
             CompilerConeAttributes.ContextFunctionTypeParams.ANNOTATION_CLASS_ID ->
                 attributes +=
                     CompilerConeAttributes.ContextFunctionTypeParams(
diff --git a/compiler/fir/resolve/src/org/jetbrains/kotlin/fir/resolve/providers/impl/FirTypeResolverImpl.kt b/compiler/fir/resolve/src/org/jetbrains/kotlin/fir/resolve/providers/impl/FirTypeResolverImpl.kt
index 976989a0934..48407b72d2d 100644
--- a/compiler/fir/resolve/src/org/jetbrains/kotlin/fir/resolve/providers/impl/FirTypeResolverImpl.kt
+++ b/compiler/fir/resolve/src/org/jetbrains/kotlin/fir/resolve/providers/impl/FirTypeResolverImpl.kt
@@ -20,6 +20,7 @@ import org.jetbrains.kotlin.fir.resolve.calls.ResolutionDiagnostic
 import org.jetbrains.kotlin.fir.resolve.diagnostics.*
 import org.jetbrains.kotlin.fir.resolve.substitution.ConeSubstitutor
 import org.jetbrains.kotlin.fir.resolve.transformers.ScopeClassDeclaration
+import org.jetbrains.kotlin.fir.symbols.ConeClassLikeLookupTag
 import org.jetbrains.kotlin.fir.symbols.FirBasedSymbol
 import org.jetbrains.kotlin.fir.symbols.SymbolInternals
 import org.jetbrains.kotlin.fir.symbols.impl.*
@@ -260,7 +261,12 @@ class FirTypeResolverImpl(private val session: FirSession) : FirTypeResolver() {
         return symbol.constructType(
             resultingArguments,
             typeRef.isMarkedNullable,
-            typeRef.annotations.computeTypeAttributes(session, containerDeclaration = containerDeclaration, shouldExpandTypeAliases = true)
+            typeRef.annotations.computeTypeAttributes(
+                session,
+                containerDeclaration = containerDeclaration,
+                shouldExpandTypeAliases = true,
+                allowExtensionFunctionType = (symbol.toLookupTag() as? ConeClassLikeLookupTag)?.isSomeFunctionType(session) == true,
+            )
         ).also {
             val lookupTag = it.lookupTag
             if (lookupTag is ConeClassLikeLookupTagImpl && symbol is FirClassLikeSymbol<*>) {
diff --git a/compiler/testData/diagnostics/tests/FreeFunctionCalledAsExtension.fir.kt b/compiler/testData/diagnostics/tests/FreeFunctionCalledAsExtension.fir.kt
deleted file mode 100644
index 140ff3919a6..00000000000
--- a/compiler/testData/diagnostics/tests/FreeFunctionCalledAsExtension.fir.kt
+++ /dev/null
@@ -1,14 +0,0 @@
-fun foo(a: (String) -> Unit) {
-    "".<!UNRESOLVED_REFERENCE!>a<!>()
-}
-
-
-
-interface A : (String) -> Unit {}
-typealias AliasedEFT = ExtensionFunctionType
-
-fun foo(a: <!WRONG_EXTENSION_FUNCTION_TYPE!>@AliasedEFT<!> A) {
-    // @Extension annotation on an unrelated type shouldn't have any effect on this diagnostic.
-    // Only kotlin.Function{n} type annotated with @Extension should
-    "".a()
-}
diff --git a/compiler/testData/diagnostics/tests/FreeFunctionCalledAsExtension.kt b/compiler/testData/diagnostics/tests/FreeFunctionCalledAsExtension.kt
index b742d3ccb3c..60d57dcb207 100644
--- a/compiler/testData/diagnostics/tests/FreeFunctionCalledAsExtension.kt
+++ b/compiler/testData/diagnostics/tests/FreeFunctionCalledAsExtension.kt
@@ -1,3 +1,4 @@
+// FIR_IDENTICAL
 fun foo(a: (String) -> Unit) {
     "".<!UNRESOLVED_REFERENCE!>a<!>()
 }
diff --git a/compiler/testData/diagnostics/tests/FreeFunctionCalledAsExtension.reversed.kt b/compiler/testData/diagnostics/tests/FreeFunctionCalledAsExtension.reversed.kt
deleted file mode 100644
index b742d3ccb3c..00000000000
--- a/compiler/testData/diagnostics/tests/FreeFunctionCalledAsExtension.reversed.kt
+++ /dev/null
@@ -1,14 +0,0 @@
-fun foo(a: (String) -> Unit) {
-    "".<!UNRESOLVED_REFERENCE!>a<!>()
-}
-
-
-
-interface A : (String) -> Unit {}
-typealias AliasedEFT = ExtensionFunctionType
-
-fun foo(a: <!WRONG_EXTENSION_FUNCTION_TYPE!>@AliasedEFT<!> A) {
-    // @Extension annotation on an unrelated type shouldn't have any effect on this diagnostic.
-    // Only kotlin.Function{n} type annotated with @Extension should
-    "".<!UNRESOLVED_REFERENCE!>a<!>()
-}