diff --git a/idea/src/org/jetbrains/kotlin/idea/intentions/branchedTransformations/BranchedFoldingUtils.kt b/idea/src/org/jetbrains/kotlin/idea/intentions/branchedTransformations/BranchedFoldingUtils.kt
index 44de4d9a3d1..12c72120064 100644
--- a/idea/src/org/jetbrains/kotlin/idea/intentions/branchedTransformations/BranchedFoldingUtils.kt
+++ b/idea/src/org/jetbrains/kotlin/idea/intentions/branchedTransformations/BranchedFoldingUtils.kt
@@ -192,9 +192,10 @@ object BranchedFoldingUtils {
                 lhs = left!!.copy() as KtExpression
                 op = operationReference.text
             }
+
             val rhs = right!!
             if (rhs is KtLambdaExpression && this.parent !is KtBlockExpression) {
-                replace(psiFactory.createExpressionByPattern("{ $0 }", rhs))
+                replace(psiFactory.createSingleStatementBlock(rhs))
             } else {
                 replace(rhs)
             }
diff --git a/idea/testData/inspectionsLocal/liftOut/ifToAssignment/lambda2.kt.after b/idea/testData/inspectionsLocal/liftOut/ifToAssignment/lambda2.kt.after
index d4782a4da56..eeab8fa514f 100644
--- a/idea/testData/inspectionsLocal/liftOut/ifToAssignment/lambda2.kt.after
+++ b/idea/testData/inspectionsLocal/liftOut/ifToAssignment/lambda2.kt.after
@@ -3,9 +3,11 @@ fun test(i: Int) {
 
     <caret>fn = if (i == 1) {
         { "foo" }
-    } else if (i == 2) {
+    }
+    else if (i == 2) {
         { "bar" }
-    } else {
+    }
+    else {
         { "baz" }
     }
 }
\ No newline at end of file