diff --git a/compiler/fir/analysis-tests/testData/resolve/callResolution/typeAliasWithNotNullBound.fir.txt b/compiler/fir/analysis-tests/testData/resolve/callResolution/typeAliasWithNotNullBound.fir.txt
index eda23012129..3fe6693c865 100644
--- a/compiler/fir/analysis-tests/testData/resolve/callResolution/typeAliasWithNotNullBound.fir.txt
+++ b/compiler/fir/analysis-tests/testData/resolve/callResolution/typeAliasWithNotNullBound.fir.txt
@@ -7,7 +7,7 @@ FILE: typeAliasWithNotNullBound.kt
     }
     public final typealias MyAlias = R|Inv<out kotlin/CharSequence>|
     public final fun foo(p: R|MyAlias|): R|kotlin/Unit| {
-        R|/bar|<R|kotlin/CharSequence|>(R|<local>/p|).R|kotlin/CharSequence.length|
+        R|/bar|<R|CapturedType(out kotlin/CharSequence)|>(R|<local>/p|).R|kotlin/CharSequence.length|
     }
     public final fun <T : R|kotlin/Any|> bar(x: R|Inv<T>|): R|T| {
         ^bar R|kotlin/TODO|()
diff --git a/compiler/fir/analysis-tests/testData/resolve/inference/capturedTypeForJavaTypeParameter.fir.txt b/compiler/fir/analysis-tests/testData/resolve/inference/capturedTypeForJavaTypeParameter.fir.txt
index 32d1c65669b..05d95fd8eca 100644
--- a/compiler/fir/analysis-tests/testData/resolve/inference/capturedTypeForJavaTypeParameter.fir.txt
+++ b/compiler/fir/analysis-tests/testData/resolve/inference/capturedTypeForJavaTypeParameter.fir.txt
@@ -4,5 +4,5 @@ FILE: main.kt
     public final fun <D : R|A|> foo(b: R|B<D>|): R|kotlin/Unit| {
     }
     public final fun main(b: R|B<*>|): R|kotlin/Unit| {
-        R|/foo|<R|ft<A, A?>|>(R|<local>/b|)
+        R|/foo|<R|CapturedType(*)|>(R|<local>/b|)
     }
diff --git a/compiler/fir/analysis-tests/testData/resolve/inference/kt40131.fir.txt b/compiler/fir/analysis-tests/testData/resolve/inference/kt40131.fir.txt
index 2b8a279d102..9b72c3d8dfc 100644
--- a/compiler/fir/analysis-tests/testData/resolve/inference/kt40131.fir.txt
+++ b/compiler/fir/analysis-tests/testData/resolve/inference/kt40131.fir.txt
@@ -5,7 +5,7 @@ FILE: kt40131.kt
         }
     public final val <T : R|kotlin/reflect/KClass<*>|> R|T|.myJava1: R|java/lang/Class<*>|
         public get(): R|java/lang/Class<*>| {
-            ^ this@R|/myJava1|.R|/javaImpl|<R|kotlin/Any|>
+            ^ this@R|/myJava1|.R|/javaImpl|<R|CapturedType(*)|>
         }
     public final val <E : R|kotlin/Any|, T : R|kotlin/reflect/KClass<E>|> R|T|.myJava2: R|java/lang/Class<E>|
         public get(): R|java/lang/Class<E>| {
diff --git a/compiler/fir/analysis-tests/testData/resolve/inference/receiverWithCapturedType.fir.txt b/compiler/fir/analysis-tests/testData/resolve/inference/receiverWithCapturedType.fir.txt
index 462119edaac..ada3dba49ae 100644
--- a/compiler/fir/analysis-tests/testData/resolve/inference/receiverWithCapturedType.fir.txt
+++ b/compiler/fir/analysis-tests/testData/resolve/inference/receiverWithCapturedType.fir.txt
@@ -15,19 +15,19 @@ FILE: receiverWithCapturedType.kt
         ^updateD R|<local>/d|
     }
     public final fun test_1_1(resolvedCall: R|ResolvedCall<out CallableDescriptor>|): R|kotlin/Unit| {
-        R|<local>/resolvedCall|.R|/getParameterForArgument|<R|CallableDescriptor|>()
+        R|<local>/resolvedCall|.R|/getParameterForArgument|<R|CapturedType(out CallableDescriptor)|>()
     }
     public final fun test_1_2(resolvedCall: R|ResolvedCall<in CallableDescriptor>|): R|kotlin/Unit| {
-        R|<local>/resolvedCall|.R|/getParameterForArgument|<R|CallableDescriptor|>()
+        R|<local>/resolvedCall|.R|/getParameterForArgument|<R|CapturedType(in CallableDescriptor)|>()
     }
     public final fun test_1_3(resolvedCall: R|ResolvedCall<CallableDescriptor>|): R|kotlin/Unit| {
         R|<local>/resolvedCall|.R|/getParameterForArgument|<R|CallableDescriptor|>()
     }
     public final fun test_2_1(resolvedCall: R|ResolvedCall<out CallableDescriptor>|, d: R|CallableDescriptor|): R|kotlin/Unit| {
-        lval x: R|CallableDescriptor| = R|<local>/resolvedCall|.<Inapplicable(INAPPLICABLE): /updateD>#<R|CallableDescriptor|>(R|<local>/d|)
+        lval x: R|CallableDescriptor| = R|<local>/resolvedCall|.<Inapplicable(INAPPLICABLE): /updateD>#<R|CapturedType(out CallableDescriptor)|>(R|<local>/d|)
     }
     public final fun test_2_2(resolvedCall: R|ResolvedCall<in CallableDescriptor>|, d: R|CallableDescriptor|): R|kotlin/Unit| {
-        lval x: R|CallableDescriptor| = R|<local>/resolvedCall|.R|/updateD|<R|CallableDescriptor|>(R|<local>/d|)
+        lval x: R|CallableDescriptor| = R|<local>/resolvedCall|.R|/updateD|<R|CapturedType(in CallableDescriptor)|>(R|<local>/d|)
     }
     public final fun test_2_3(resolvedCall: R|ResolvedCall<CallableDescriptor>|, d: R|CallableDescriptor|): R|kotlin/Unit| {
         lval x: R|CallableDescriptor| = R|<local>/resolvedCall|.R|/updateD|<R|CallableDescriptor|>(R|<local>/d|)
diff --git a/compiler/fir/analysis-tests/testData/resolve/inference/simpleCapturedTypes.fir.txt b/compiler/fir/analysis-tests/testData/resolve/inference/simpleCapturedTypes.fir.txt
index ecf5def9bd4..a795f099ae1 100644
--- a/compiler/fir/analysis-tests/testData/resolve/inference/simpleCapturedTypes.fir.txt
+++ b/compiler/fir/analysis-tests/testData/resolve/inference/simpleCapturedTypes.fir.txt
@@ -19,10 +19,10 @@ FILE: simpleCapturedTypes.kt
             ^ this@R|/idP|
         }
     private final fun getSetterInfos(kc: R|KC<out Ann>|): R|kotlin/Unit| {
-        R|/id|<R|Ann|>(R|<local>/kc|).R|SubstitutionOverride</KC.x: R|CapturedType(out Ann)|>|.R|/Ann.foo|()
-        R|<local>/kc|.R|/idR|<R|Ann|>().R|SubstitutionOverride</KC.x: R|CapturedType(out Ann)|>|.R|/Ann.foo|()
-        R|<local>/kc|.R|/idP|<R|Ann|>.R|SubstitutionOverride</KC.x: R|CapturedType(out Ann)|>|.R|/Ann.foo|()
-        lval x1: R|KC<out Ann>| = R|/id|<R|Ann|>(R|<local>/kc|)
-        lval x2: R|KC<out Ann>| = R|<local>/kc|.R|/idR|<R|Ann|>()
-        lval x3: R|KC<out Ann>| = R|<local>/kc|.R|/idP|<R|Ann|>
+        R|/id|<R|CapturedType(out Ann)|>(R|<local>/kc|).R|SubstitutionOverride</KC.x: R|CapturedType(out Ann)|>|.R|/Ann.foo|()
+        R|<local>/kc|.R|/idR|<R|CapturedType(out Ann)|>().R|SubstitutionOverride</KC.x: R|CapturedType(out Ann)|>|.R|/Ann.foo|()
+        R|<local>/kc|.R|/idP|<R|CapturedType(out Ann)|>.R|SubstitutionOverride</KC.x: R|CapturedType(out Ann)|>|.R|/Ann.foo|()
+        lval x1: R|KC<out Ann>| = R|/id|<R|CapturedType(out Ann)|>(R|<local>/kc|)
+        lval x2: R|KC<out Ann>| = R|<local>/kc|.R|/idR|<R|CapturedType(out Ann)|>()
+        lval x3: R|KC<out Ann>| = R|<local>/kc|.R|/idP|<R|CapturedType(out Ann)|>
     }
diff --git a/compiler/fir/analysis-tests/testData/resolve/references/referenceToExtension.fir.txt b/compiler/fir/analysis-tests/testData/resolve/references/referenceToExtension.fir.txt
index 3210aeec2a9..22176c0501c 100644
--- a/compiler/fir/analysis-tests/testData/resolve/references/referenceToExtension.fir.txt
+++ b/compiler/fir/analysis-tests/testData/resolve/references/referenceToExtension.fir.txt
@@ -40,8 +40,8 @@ FILE: referenceToExtension.kt
         }
 
         public final fun test_2(): R|kotlin/Unit| {
-            lval extensionValRef: R|kotlin/reflect/KProperty1<GenericTest.B<*>, GenericTest.A<CapturedType(*)>>| = Q|GenericTest.B|::R|/GenericTest.extensionVal<kotlin/Any?>|
-            lval extensionFunRef: R|@ExtensionFunctionType kotlin/reflect/KFunction1<GenericTest.B<*>, GenericTest.A<CapturedType(*)>>| = Q|GenericTest.B|::R|/GenericTest.extensionFun<kotlin/Any?>|
+            lval extensionValRef: R|kotlin/reflect/KProperty1<GenericTest.B<*>, GenericTest.A<CapturedType(*)>>| = Q|GenericTest.B|::R|/GenericTest.extensionVal<CapturedType(*)>|
+            lval extensionFunRef: R|@ExtensionFunctionType kotlin/reflect/KFunction1<GenericTest.B<*>, GenericTest.A<CapturedType(*)>>| = Q|GenericTest.B|::R|/GenericTest.extensionFun<CapturedType(*)>|
         }
 
     }
diff --git a/compiler/fir/analysis-tests/testData/resolveWithStdlib/j+k/LoggerInstance.fir.txt b/compiler/fir/analysis-tests/testData/resolveWithStdlib/j+k/LoggerInstance.fir.txt
index 6725333eb56..7420d1f5c54 100644
--- a/compiler/fir/analysis-tests/testData/resolveWithStdlib/j+k/LoggerInstance.fir.txt
+++ b/compiler/fir/analysis-tests/testData/resolveWithStdlib/j+k/LoggerInstance.fir.txt
@@ -7,7 +7,7 @@ FILE: test.kt
             super<R|kotlin/Any|>()
         }
 
-        private final val klass: R|java/lang/Class<out MyTest>| = <getClass>(this@R|/MyTest|).R|kotlin/jvm/java|<R|MyTest|>
+        private final val klass: R|java/lang/Class<out MyTest>| = <getClass>(this@R|/MyTest|).R|kotlin/jvm/java|<R|CapturedType(out MyTest)|>
             private get(): R|java/lang/Class<out MyTest>|
 
         private final val logger: R|ft<Logger, Logger?>| = Q|Logger|.R|/Logger.getInstance|(this@R|/MyTest|.R|/MyTest.klass|)
diff --git a/compiler/fir/analysis-tests/testData/resolveWithStdlib/j+k/capturedFlexible.fir.txt b/compiler/fir/analysis-tests/testData/resolveWithStdlib/j+k/capturedFlexible.fir.txt
index ca4b6e46110..0a76ccf0668 100644
--- a/compiler/fir/analysis-tests/testData/resolveWithStdlib/j+k/capturedFlexible.fir.txt
+++ b/compiler/fir/analysis-tests/testData/resolveWithStdlib/j+k/capturedFlexible.fir.txt
@@ -1,4 +1,4 @@
 FILE: capturedFlexible.kt
     public final fun foo(z: R|java/util/zip/ZipFile|): R|kotlin/Unit| {
-        R|<local>/z|.R|java/util/zip/ZipFile.entries|().R|kotlin/sequences/asSequence|<R|ft<java/util/zip/ZipEntry, java/util/zip/ZipEntry?>|>()
+        R|<local>/z|.R|java/util/zip/ZipFile.entries|().R|kotlin/sequences/asSequence|<R|CapturedType(out ft<java/util/zip/ZipEntry, java/util/zip/ZipEntry?>)|>()
     }
diff --git a/compiler/fir/fir2ir/src/org/jetbrains/kotlin/fir/backend/Fir2IrTypeConverter.kt b/compiler/fir/fir2ir/src/org/jetbrains/kotlin/fir/backend/Fir2IrTypeConverter.kt
index fa41aca2f26..e53a5f2bfb7 100644
--- a/compiler/fir/fir2ir/src/org/jetbrains/kotlin/fir/backend/Fir2IrTypeConverter.kt
+++ b/compiler/fir/fir2ir/src/org/jetbrains/kotlin/fir/backend/Fir2IrTypeConverter.kt
@@ -135,14 +135,12 @@ class Fir2IrTypeConverter(
             is ConeCapturedType -> {
                 val cached = capturedTypeCache[this]
                 if (cached == null) {
-                    val irType = lowerType?.toIrType(typeContext) ?: run {
-                        capturedTypeCache[this] = errorTypeForCapturedTypeStub
-                        val supertypes = constructor.supertypes!!
-                        val approximation = supertypes.find {
-                            it == (constructor.projection as? ConeKotlinTypeProjection)?.type
-                        } ?: supertypes.first()
-                        approximation.toIrType(typeContext)
-                    }
+                    capturedTypeCache[this] = errorTypeForCapturedTypeStub
+                    val supertypes = constructor.supertypes!!
+                    val approximation = supertypes.find {
+                        it == (constructor.projection as? ConeKotlinTypeProjection)?.type
+                    } ?: supertypes.first()
+                    val irType = approximation.toIrType(typeContext)
                     capturedTypeCache[this] = irType
                     irType
                 } else {
diff --git a/compiler/fir/resolve/src/org/jetbrains/kotlin/fir/resolve/transformers/FirCallCompletionResultsWriterTransformer.kt b/compiler/fir/resolve/src/org/jetbrains/kotlin/fir/resolve/transformers/FirCallCompletionResultsWriterTransformer.kt
index 2efe77f427c..8557148fa1c 100644
--- a/compiler/fir/resolve/src/org/jetbrains/kotlin/fir/resolve/transformers/FirCallCompletionResultsWriterTransformer.kt
+++ b/compiler/fir/resolve/src/org/jetbrains/kotlin/fir/resolve/transformers/FirCallCompletionResultsWriterTransformer.kt
@@ -504,7 +504,7 @@ class FirCallCompletionResultsWriterTransformer(
             .map {
                 finalSubstitutor.substituteOrSelf(it).let { substitutedType ->
                     typeApproximator.approximateToSuperType(
-                        substitutedType, TypeApproximatorConfiguration.FinalApproximationAfterResolutionAndInference,
+                        substitutedType, TypeApproximatorConfiguration.TypeArgumentApproximation,
                     ) ?: substitutedType
                 }
             }
diff --git a/compiler/resolution.common/src/org/jetbrains/kotlin/types/TypeApproximatorConfiguration.kt b/compiler/resolution.common/src/org/jetbrains/kotlin/types/TypeApproximatorConfiguration.kt
index 4887991b41c..9622c559f02 100644
--- a/compiler/resolution.common/src/org/jetbrains/kotlin/types/TypeApproximatorConfiguration.kt
+++ b/compiler/resolution.common/src/org/jetbrains/kotlin/types/TypeApproximatorConfiguration.kt
@@ -53,14 +53,14 @@ open class TypeApproximatorConfiguration {
         override val intersectionTypesInContravariantPositions: Boolean get() = true
     }
 
-    abstract class AbstractCapturedTypesApproximation(val approximatedCapturedStatus: CaptureStatus) :
+    sealed class AbstractCapturedTypesApproximation(val approximatedCapturedStatus: CaptureStatus?) :
         AllFlexibleSameValue() {
         override val allFlexible: Boolean get() = true
         override val errorType: Boolean get() = true
 
         // i.e. will be approximated only approximatedCapturedStatus captured types
         override fun capturedType(ctx: TypeSystemInferenceExtensionContext, type: CapturedTypeMarker): Boolean =
-            type.captureStatus(ctx) == approximatedCapturedStatus
+            approximatedCapturedStatus != null && type.captureStatus(ctx) == approximatedCapturedStatus
 
         override val intersection: IntersectionStrategy get() = IntersectionStrategy.ALLOWED
         override val typeVariable: (TypeVariableTypeConstructorMarker) -> Boolean get() = { true }
@@ -79,6 +79,11 @@ open class TypeApproximatorConfiguration {
         override val intersectionTypesInContravariantPositions: Boolean get() = true
     }
 
+    object TypeArgumentApproximation : AbstractCapturedTypesApproximation(null) {
+        override val integerLiteralType: Boolean get() = true
+        override val intersectionTypesInContravariantPositions: Boolean get() = true
+    }
+
     object IntegerLiteralsTypesApproximation : AllFlexibleSameValue() {
         override val integerLiteralType: Boolean get() = true
         override val allFlexible: Boolean get() = true
diff --git a/compiler/testData/diagnostics/tests/generics/tpAsReified/CapturedAsReified.fir.kt b/compiler/testData/diagnostics/tests/generics/tpAsReified/CapturedAsReified.fir.kt
deleted file mode 100644
index 8921ee1031c..00000000000
--- a/compiler/testData/diagnostics/tests/generics/tpAsReified/CapturedAsReified.fir.kt
+++ /dev/null
@@ -1,8 +0,0 @@
-// !DIAGNOSTICS: -UNUSED_PARAMETER
-class A<F>
-
-inline fun <reified T> foo(x: A<T>) {}
-
-fun test(x: A<out CharSequence>) {
-    foo(x)
-}
diff --git a/compiler/testData/diagnostics/tests/generics/tpAsReified/CapturedAsReified.kt b/compiler/testData/diagnostics/tests/generics/tpAsReified/CapturedAsReified.kt
index 97b84e5fdb2..c2af0d81742 100644
--- a/compiler/testData/diagnostics/tests/generics/tpAsReified/CapturedAsReified.kt
+++ b/compiler/testData/diagnostics/tests/generics/tpAsReified/CapturedAsReified.kt
@@ -1,3 +1,4 @@
+// FIR_IDENTICAL
 // !DIAGNOSTICS: -UNUSED_PARAMETER
 class A<F>