diff --git a/platform/vcs-impl/src/com/intellij/openapi/vcs/impl/ModuleDefaultVcsRootPolicy.java b/platform/vcs-impl/src/com/intellij/openapi/vcs/impl/ModuleDefaultVcsRootPolicy.java
index b00fc6958a2c..a2f510532f03 100644
--- a/platform/vcs-impl/src/com/intellij/openapi/vcs/impl/ModuleDefaultVcsRootPolicy.java
+++ b/platform/vcs-impl/src/com/intellij/openapi/vcs/impl/ModuleDefaultVcsRootPolicy.java
@@ -116,18 +116,27 @@ public class ModuleDefaultVcsRootPolicy extends DefaultVcsRootPolicy {
   public VirtualFile getVcsRootFor(@NotNull VirtualFile file) {
     FileIndexFacade indexFacade = PeriodicalTasksCloser.getInstance().safeGetService(myProject, FileIndexFacade.class);
     if (myBaseDir != null && indexFacade.isValidAncestor(myBaseDir, file)) {
+      LOG.debug("File " + file + " is under project base dir " + myBaseDir);
       return myBaseDir;
     }
     VirtualFile contentRoot = ProjectRootManager.getInstance(myProject).getFileIndex().getContentRootForFile(file, Registry.is("ide.hide.excluded.files"));
-    if (contentRoot != null && contentRoot.isDirectory()) {
-      return contentRoot;
+    if (contentRoot != null) {
+      LOG.debug("Content root for file " + file + " is " + contentRoot);
+      if (contentRoot.isDirectory()) {
+        return contentRoot;
+      }
+      VirtualFile parent = contentRoot.getParent();
+      LOG.debug("Content root is not a directory, using its parent " + parent);
+      return parent;
     }
     if (ProjectKt.isDirectoryBased(myProject)) {
       VirtualFile ideaDir = ProjectKt.getStateStore(myProject).getDirectoryStoreFile();
       if (ideaDir != null && VfsUtilCore.isAncestor(ideaDir, file, false)) {
+        LOG.debug("File " + file + " is under .idea");
         return ideaDir;
       }
     }
+    LOG.debug("Couldn't find proper root for " + file);
     return null;
   }