diff --git a/tests/unit/modules/test_defaults.py b/tests/unit/modules/test_defaults.py
index 31427a26a6..d12ad01282 100644
--- a/tests/unit/modules/test_defaults.py
+++ b/tests/unit/modules/test_defaults.py
@@ -37,3 +37,82 @@ class DefaultsTestCase(TestCase, LoaderModuleMockMixin):
                       MagicMock(return_value={'users': {'root': [0]}})):
             self.assertEqual(defaults.get('core:users:root'),
                              {'users': {'root': [0]}})
+
+    def test_merge_with_list_merging(self):
+        '''
+        Test deep merging of dicts with merge_lists enabled.
+        '''
+
+        src_dict = {
+            'string_key': 'string_val_src',
+            'list_key': [
+                'list_val_src',
+            ],
+            'dict_key': {
+                'dict_key_src': 'dict_val_src',
+            }
+        }
+
+        dest_dict = {
+            'string_key': 'string_val_dest',
+            'list_key': [
+                'list_val_dest',
+            ],
+            'dict_key': {
+                'dict_key_dest': 'dict_val_dest',
+            }
+        }
+
+        merged_dict = {
+            'string_key': 'string_val_src',
+            'list_key': [
+                'list_val_dest',
+                'list_val_src'
+            ],
+            'dict_key': {
+                'dict_key_dest': 'dict_val_dest',
+                'dict_key_src': 'dict_val_src'
+            }
+        }
+
+        defaults.merge(dest_dict, src_dict, merge_lists=True)
+        self.assertEqual(dest_dict, merged_dict)
+
+    def test_merge_without_list_merging(self):
+        '''
+        Test deep merging of dicts with merge_lists disabled.
+        '''
+
+        src_dict = {
+            'string_key': 'string_val_src',
+            'list_key': [
+                'list_val_src',
+            ],
+            'dict_key': {
+                'dict_key_src': 'dict_val_src',
+            }
+        }
+
+        dest_dict = {
+            'string_key': 'string_val_dest',
+            'list_key': [
+                'list_val_dest',
+            ],
+            'dict_key': {
+                'dict_key_dest': 'dict_val_dest',
+            }
+        }
+
+        merged_dict = {
+            'string_key': 'string_val_src',
+            'list_key': [
+                'list_val_src'
+            ],
+            'dict_key': {
+                'dict_key_dest': 'dict_val_dest',
+                'dict_key_src': 'dict_val_src'
+            }
+        }
+
+        defaults.merge(dest_dict, src_dict, merge_lists=False)
+        self.assertEqual(dest_dict, merged_dict)