diff --git a/idea/idea-gradle/tests/org/jetbrains/kotlin/idea/codeInsight/gradle/GradleFacetImportTest.kt b/idea/idea-gradle/tests/org/jetbrains/kotlin/idea/codeInsight/gradle/GradleFacetImportTest.kt
index fa85d90857c..d4e4f5d87af 100644
--- a/idea/idea-gradle/tests/org/jetbrains/kotlin/idea/codeInsight/gradle/GradleFacetImportTest.kt
+++ b/idea/idea-gradle/tests/org/jetbrains/kotlin/idea/codeInsight/gradle/GradleFacetImportTest.kt
@@ -1581,6 +1581,43 @@ compileTestKotlin {
         Assert.assertEquals("MultiTest_myTest", facetSettings("MultiTest-js_myTest").implementedModuleName)
     }
 
+    @Test
+    fun testAPIVersionExceedingLanguageVersion() {
+        createProjectSubFile("build.gradle", """
+            buildscript {
+                repositories {
+                    mavenCentral()
+                    maven {
+                        url 'http://dl.bintray.com/kotlin/kotlin-eap-1.1'
+                    }
+                }
+
+                dependencies {
+                    classpath("org.jetbrains.kotlin:kotlin-gradle-plugin:1.1.0")
+                }
+            }
+
+            apply plugin: 'kotlin'
+
+            dependencies {
+                compile "org.jetbrains.kotlin:kotlin-stdlib:1.1.0"
+            }
+
+            compileKotlin {
+                kotlinOptions.languageVersion = "1.1"
+                kotlinOptions.apiVersion = "1.2"
+            }
+        """)
+        importProject()
+
+        with (facetSettings) {
+            Assert.assertEquals("1.1", languageLevel!!.versionString)
+            Assert.assertEquals("1.1", apiLevel!!.versionString)
+        }
+
+        assertAllModulesConfigured()
+    }
+
     private fun assertAllModulesConfigured() {
         runReadAction {
             for (moduleGroup in ModuleSourceRootMap(myProject).groupByBaseModules(myProject.allModules())) {
diff --git a/idea/src/org/jetbrains/kotlin/idea/facet/facetUtils.kt b/idea/src/org/jetbrains/kotlin/idea/facet/facetUtils.kt
index 0ddf5e72675..6b0390ed1b2 100644
--- a/idea/src/org/jetbrains/kotlin/idea/facet/facetUtils.kt
+++ b/idea/src/org/jetbrains/kotlin/idea/facet/facetUtils.kt
@@ -310,6 +310,12 @@ fun parseCompilerArgumentsToFacet(
             copyFieldsSatisfying(this, compilerArguments) { exposeAsAdditionalArgument(it) || it.name in ignoredFields }
         }
 
+        val languageLevel = languageLevel
+        val apiLevel = apiLevel
+        if (languageLevel != null && apiLevel != null && apiLevel > languageLevel) {
+            this.apiLevel = languageLevel
+        }
+
         updateMergedArguments()
     }
 }