diff --git a/compiler/frontend/src/org/jetbrains/jet/lang/cfg/JetControlFlowProcessor.java b/compiler/frontend/src/org/jetbrains/jet/lang/cfg/JetControlFlowProcessor.java
index 1cc0a9090fb..aa28746f47a 100644
--- a/compiler/frontend/src/org/jetbrains/jet/lang/cfg/JetControlFlowProcessor.java
+++ b/compiler/frontend/src/org/jetbrains/jet/lang/cfg/JetControlFlowProcessor.java
@@ -1001,7 +1001,10 @@ public class JetControlFlowProcessor {
             builder.declareParameter(parameter);
             JetExpression defaultValue = parameter.getDefaultValue();
             if (defaultValue != null) {
+                Label skipDefaultValue = builder.createUnboundLabel("after default value for parameter " + parameter.getName());
+                builder.nondeterministicJump(skipDefaultValue, defaultValue, null);
                 generateInstructions(defaultValue, context);
+                builder.bindLabel(skipDefaultValue);
             }
             generateInitializer(parameter, createSyntheticValue(parameter));
         }
diff --git a/compiler/testData/cfg/functions/DefaultValuesForArguments.instructions b/compiler/testData/cfg/functions/DefaultValuesForArguments.instructions
new file mode 100644
index 00000000000..a42371f93ab
--- /dev/null
+++ b/compiler/testData/cfg/functions/DefaultValuesForArguments.instructions
@@ -0,0 +1,22 @@
+== foo ==
+fun foo(i: Int = 1) = i + 2
+---------------------
+L0:
+  1 <START>
+    v(i: Int = 1)
+    jmp?(L2 [after default value for parameter i])    NEXT:[magic(i: Int = 1) -> <v1>, r(1) -> <v0>]
+    r(1) -> <v0>
+L2 [after default value for parameter i]:
+    magic(i: Int = 1) -> <v1>                         PREV:[jmp?(L2 [after default value for parameter i]), r(1) -> <v0>]
+    w(i|<v1>)
+    r(i) -> <v2>
+    r(2) -> <v3>
+    mark(i + 2)
+    call(+, plus|<v2>, <v3>) -> <v4>
+L1:
+    <END>                                             NEXT:[<SINK>]
+error:
+    <ERROR>                                           PREV:[]
+sink:
+    <SINK>                                            PREV:[<ERROR>, <END>]
+=====================
diff --git a/compiler/testData/cfg/functions/DefaultValuesForArguments.kt b/compiler/testData/cfg/functions/DefaultValuesForArguments.kt
new file mode 100644
index 00000000000..3b6a8f9835c
--- /dev/null
+++ b/compiler/testData/cfg/functions/DefaultValuesForArguments.kt
@@ -0,0 +1 @@
+fun foo(i: Int = 1) = i + 2
\ No newline at end of file
diff --git a/compiler/testData/cfg/functions/DefaultValuesForArguments.values b/compiler/testData/cfg/functions/DefaultValuesForArguments.values
new file mode 100644
index 00000000000..4c5426bd1d6
--- /dev/null
+++ b/compiler/testData/cfg/functions/DefaultValuesForArguments.values
@@ -0,0 +1,8 @@
+== foo ==
+fun foo(i: Int = 1) = i + 2
+---------------------
+1       <v0>   NEW()          
+i       <v2>   NEW()          
+2       <v3>   NEW()          
+i + 2   <v4>   NEW(<v2>, <v3>)
+=====================
diff --git a/compiler/tests/org/jetbrains/jet/cfg/ControlFlowTestGenerated.java b/compiler/tests/org/jetbrains/jet/cfg/ControlFlowTestGenerated.java
index 5d9e7198df8..597bde87fe3 100644
--- a/compiler/tests/org/jetbrains/jet/cfg/ControlFlowTestGenerated.java
+++ b/compiler/tests/org/jetbrains/jet/cfg/ControlFlowTestGenerated.java
@@ -31,7 +31,7 @@ import org.jetbrains.jet.cfg.AbstractControlFlowTest;
 /** This class is generated by {@link org.jetbrains.jet.generators.tests.TestsPackage}. DO NOT MODIFY MANUALLY */
 @SuppressWarnings("all")
 @TestMetadata("compiler/testData/cfg")
-@InnerTestClasses({ControlFlowTestGenerated.Arrays.class, ControlFlowTestGenerated.Basic.class, ControlFlowTestGenerated.Bugs.class, ControlFlowTestGenerated.ControlStructures.class, ControlFlowTestGenerated.Conventions.class, ControlFlowTestGenerated.DeadCode.class, ControlFlowTestGenerated.Declarations.class, ControlFlowTestGenerated.Expressions.class, ControlFlowTestGenerated.TailCalls.class})
+@InnerTestClasses({ControlFlowTestGenerated.Arrays.class, ControlFlowTestGenerated.Basic.class, ControlFlowTestGenerated.Bugs.class, ControlFlowTestGenerated.ControlStructures.class, ControlFlowTestGenerated.Conventions.class, ControlFlowTestGenerated.DeadCode.class, ControlFlowTestGenerated.Declarations.class, ControlFlowTestGenerated.Expressions.class, ControlFlowTestGenerated.Functions.class, ControlFlowTestGenerated.TailCalls.class})
 public class ControlFlowTestGenerated extends AbstractControlFlowTest {
     public void testAllFilesPresentInCfg() throws Exception {
         JetTestUtils.assertAllTestsPresentByMetadata(this.getClass(), "org.jetbrains.jet.generators.tests.TestsPackage", new File("compiler/testData/cfg"), Pattern.compile("^(.+)\\.kt$"), true);
@@ -406,6 +406,19 @@ public class ControlFlowTestGenerated extends AbstractControlFlowTest {
         
     }
     
+    @TestMetadata("compiler/testData/cfg/functions")
+    public static class Functions extends AbstractControlFlowTest {
+        public void testAllFilesPresentInFunctions() throws Exception {
+            JetTestUtils.assertAllTestsPresentByMetadata(this.getClass(), "org.jetbrains.jet.generators.tests.TestsPackage", new File("compiler/testData/cfg/functions"), Pattern.compile("^(.+)\\.kt$"), true);
+        }
+        
+        @TestMetadata("DefaultValuesForArguments.kt")
+        public void testDefaultValuesForArguments() throws Exception {
+            doTest("compiler/testData/cfg/functions/DefaultValuesForArguments.kt");
+        }
+        
+    }
+    
     @TestMetadata("compiler/testData/cfg/tailCalls")
     public static class TailCalls extends AbstractControlFlowTest {
         public void testAllFilesPresentInTailCalls() throws Exception {
@@ -450,6 +463,7 @@ public class ControlFlowTestGenerated extends AbstractControlFlowTest {
         suite.addTestSuite(DeadCode.class);
         suite.addTest(Declarations.innerSuite());
         suite.addTestSuite(Expressions.class);
+        suite.addTestSuite(Functions.class);
         suite.addTestSuite(TailCalls.class);
         return suite;
     }
diff --git a/compiler/tests/org/jetbrains/jet/cfg/PseudoValueTestGenerated.java b/compiler/tests/org/jetbrains/jet/cfg/PseudoValueTestGenerated.java
index cbe2296d004..4a9f13962dc 100644
--- a/compiler/tests/org/jetbrains/jet/cfg/PseudoValueTestGenerated.java
+++ b/compiler/tests/org/jetbrains/jet/cfg/PseudoValueTestGenerated.java
@@ -33,7 +33,7 @@ import org.jetbrains.jet.cfg.AbstractPseudoValueTest;
 @InnerTestClasses({PseudoValueTestGenerated.Cfg.class, PseudoValueTestGenerated.Cfg_variables.class})
 public class PseudoValueTestGenerated extends AbstractPseudoValueTest {
     @TestMetadata("compiler/testData/cfg")
-    @InnerTestClasses({Cfg.Arrays.class, Cfg.Basic.class, Cfg.Bugs.class, Cfg.ControlStructures.class, Cfg.Conventions.class, Cfg.DeadCode.class, Cfg.Declarations.class, Cfg.Expressions.class, Cfg.TailCalls.class})
+    @InnerTestClasses({Cfg.Arrays.class, Cfg.Basic.class, Cfg.Bugs.class, Cfg.ControlStructures.class, Cfg.Conventions.class, Cfg.DeadCode.class, Cfg.Declarations.class, Cfg.Expressions.class, Cfg.Functions.class, Cfg.TailCalls.class})
     public static class Cfg extends AbstractPseudoValueTest {
         public void testAllFilesPresentInCfg() throws Exception {
             JetTestUtils.assertAllTestsPresentByMetadata(this.getClass(), "org.jetbrains.jet.generators.tests.TestsPackage", new File("compiler/testData/cfg"), Pattern.compile("^(.+)\\.kt$"), true);
@@ -408,6 +408,19 @@ public class PseudoValueTestGenerated extends AbstractPseudoValueTest {
             
         }
         
+        @TestMetadata("compiler/testData/cfg/functions")
+        public static class Functions extends AbstractPseudoValueTest {
+            public void testAllFilesPresentInFunctions() throws Exception {
+                JetTestUtils.assertAllTestsPresentByMetadata(this.getClass(), "org.jetbrains.jet.generators.tests.TestsPackage", new File("compiler/testData/cfg/functions"), Pattern.compile("^(.+)\\.kt$"), true);
+            }
+            
+            @TestMetadata("DefaultValuesForArguments.kt")
+            public void testDefaultValuesForArguments() throws Exception {
+                doTest("compiler/testData/cfg/functions/DefaultValuesForArguments.kt");
+            }
+            
+        }
+        
         @TestMetadata("compiler/testData/cfg/tailCalls")
         public static class TailCalls extends AbstractPseudoValueTest {
             public void testAllFilesPresentInTailCalls() throws Exception {
@@ -452,6 +465,7 @@ public class PseudoValueTestGenerated extends AbstractPseudoValueTest {
             suite.addTestSuite(DeadCode.class);
             suite.addTest(Declarations.innerSuite());
             suite.addTestSuite(Expressions.class);
+            suite.addTestSuite(Functions.class);
             suite.addTestSuite(TailCalls.class);
             return suite;
         }