diff --git a/src/lighthouse.c b/src/lighthouse.c
index 58d522807..54591cd16 100644
--- a/src/lighthouse.c
+++ b/src/lighthouse.c
@@ -71,15 +71,18 @@ int lighthouse_range(const building * b, const faction * f)
         if (skill_enabled(SK_PERCEPTION)) {
             region *r = b->region;
             int c = 0;
+            int cap = buildingcapacity(b);
             unit *u;
+
             for (u = r->units; u; u = u->next) {
                 if (u->building == b || u == building_owner(b)) {
                     if (u->building == b) {
                         c += u->number;
                     }
-                    if (c > buildingcapacity(b))
+                    if (c > cap) {
                         break;
-                    if (f == NULL || u->faction == f) {
+                    }
+                    else if (f == NULL || u->faction == f) {
                         int sk = effskill(u, SK_PERCEPTION, 0) / 3;
                         d = _max(d, sk);
                         d = _min(maxd, d);
diff --git a/src/lighthouse.test.c b/src/lighthouse.test.c
index 193de58a6..391146d61 100644
--- a/src/lighthouse.test.c
+++ b/src/lighthouse.test.c
@@ -16,33 +16,38 @@
 
 static void test_lighthouse_range(CuTest * tc)
 {
-    faction *f;
-    unit *u;
+    unit *u1, *u2;
     region *r1, *r2;
     building *b;
 
     test_setup();
     r1 = test_create_region(0, 0, 0);
     r2 = test_create_region(1, 0, 0);
-    f = test_create_faction(0);
-    u = test_create_unit(f, r1);
+    u1 = test_create_unit(test_create_faction(0), r1);
+    u2 = test_create_unit(test_create_faction(0), r1);
     b = test_create_building(r1, test_create_buildingtype("lighthouse"));
     CuAssertIntEquals(tc, 0, lighthouse_range(b, NULL));
-    CuAssertIntEquals(tc, 0, lighthouse_range(b, f));
+    CuAssertIntEquals(tc, 0, lighthouse_range(b, u1->faction));
     b->size = 10;
     CuAssertIntEquals(tc, 0, lighthouse_range(b, NULL));
-    u->building = b;
-    set_level(u, SK_PERCEPTION, 3);
+    u1->building = b;
+    u2->building = b;
+    u1->number = 10;
+    set_level(u1, SK_PERCEPTION, 3);
+    set_level(u2, SK_PERCEPTION, 3);
     CuAssertIntEquals(tc, 0, lighthouse_range(b, NULL));
     b->flags |= BLD_MAINTAINED;
     CuAssertIntEquals(tc, 1, lighthouse_range(b, NULL));
-    set_level(u, SK_PERCEPTION, 6);
-    CuAssertIntEquals(tc, 2, lighthouse_range(b, NULL));
+    set_level(u1, SK_PERCEPTION, 6);
+    CuAssertIntEquals(tc, 2, lighthouse_range(b, u1->faction));
+    CuAssertIntEquals(tc, 0, lighthouse_range(b, u2->faction));
     b->size = 100;
+    update_lighthouse(b);
     CuAssertIntEquals(tc, 2, lighthouse_range(b, NULL));
-    set_level(u, SK_PERCEPTION, 9);
+    set_level(u1, SK_PERCEPTION, 9);
     CuAssertIntEquals(tc, 3, lighthouse_range(b, NULL));
-    CuAssertIntEquals(tc, 3, lighthouse_range(b, f));
+    CuAssertIntEquals(tc, 3, lighthouse_range(b, u1->faction));
+    CuAssertIntEquals(tc, 1, lighthouse_range(b, u2->faction));
     CuAssertIntEquals(tc, 0, lighthouse_range(b, test_create_faction(0)));
     test_cleanup();
 }
diff --git a/src/reports.c b/src/reports.c
index 50e220393..915aa8a1b 100644
--- a/src/reports.c
+++ b/src/reports.c
@@ -1350,8 +1350,7 @@ void prepare_report(report_context *ctx, faction *f)
                     faction_add_seen(f, r, seen_unit);
                 }
                 if (fval(r, RF_LIGHTHOUSE)) {
-                    // TODO: is the building big enough for the unit?
-                    if (u->building && u->building->type == bt_lighthouse) {
+                    if (u->building && u->building->type == bt_lighthouse && inside_building(u)) {
                         /* we are in a lighthouse. add the regions we can see from here! */
                         prepare_lighthouse(u->building, ctx);
                     }
diff --git a/src/reports.test.c b/src/reports.test.c
index 503f8a1be..1e3f800e4 100644
--- a/src/reports.test.c
+++ b/src/reports.test.c
@@ -12,6 +12,7 @@
 #include <kernel/race.h>
 #include <kernel/region.h>
 #include <kernel/ship.h>
+#include <kernel/terrain.h>
 #include <kernel/unit.h>
 #include <kernel/spell.h>
 #include <kernel/spellbook.h>
@@ -264,24 +265,29 @@ static void test_prepare_lighthouse(CuTest *tc) {
     unit *u;
     building *b;
     building_type *btype;
+    const struct terrain_type *t_ocean, *t_plain;
 
     test_setup();
+    t_ocean = test_create_terrain("ocean", SEA_REGION);
+    t_plain = test_create_terrain("plain", LAND_REGION);
     f = test_create_faction(0);
-    r1 = test_create_region(0, 0, 0);
-    r2 = test_create_region(1, 0, 0);
-    r3 = test_create_region(2, 0, 0);
+    r1 = test_create_region(0, 0, t_plain);
+    r2 = test_create_region(1, 0, t_ocean);
+    r3 = test_create_region(2, 0, t_ocean);
     btype = test_create_buildingtype("lighthouse");
     b = test_create_building(r1, btype);
+    b->flags |= BLD_MAINTAINED;
     b->size = 10;
+    update_lighthouse(b);
     u = test_create_unit(f, r1);
     u->building = b;
-    update_lighthouse(b);
+    set_level(u, SK_PERCEPTION, 3);
     prepare_report(&ctx, f);
     CuAssertPtrEquals(tc, r1, ctx.first);
-    CuAssertPtrEquals(tc, r3, ctx.last);
+    CuAssertPtrEquals(tc, NULL, ctx.last);
     CuAssertIntEquals(tc, seen_unit, r1->seen.mode);
     CuAssertIntEquals(tc, seen_lighthouse, r2->seen.mode);
-    CuAssertIntEquals(tc, seen_none, r3->seen.mode);
+    CuAssertIntEquals(tc, seen_neighbour, r3->seen.mode);
     test_cleanup();
 }
 
@@ -314,7 +320,7 @@ static void test_prepare_report(CuTest *tc) {
     prepare_report(&ctx, f);
     CuAssertPtrEquals(tc, regions, ctx.first);
     CuAssertPtrEquals(tc, r, ctx.last);
-    CuAssertIntEquals(tc, seen_neighbour, r->seen.mode);
+    CuAssertIntEquals(tc, seen_none, r->seen.mode);
     
     test_cleanup();
 }