diff --git a/docs/src/basics/MTKLanguage.md b/docs/src/basics/MTKLanguage.md
index 685c549429..7e1f6abb98 100644
--- a/docs/src/basics/MTKLanguage.md
+++ b/docs/src/basics/MTKLanguage.md
@@ -73,7 +73,7 @@ end
         v_array(t)[1:N, 1:M]
         v_for_defaults(t)
     end
-    @extend ModelB(; p1)
+    @extend ModelB(p1 = 1)
     @components begin
         model_a = ModelA(; k_array)
         model_array_a = [ModelA(; k = i) for i in 1:N]
@@ -149,14 +149,18 @@ julia> ModelingToolkit.getdefault(model_c1.v)
 
 #### `@extend` begin block
 
-  - Partial systems can be extended in a higher system as `@extend PartialSystem(; kwargs)`.
-  - Keyword arguments pf partial system in the `@extend` definition are added as the keyword arguments of the base system.
-  - Note that in above example, `p1` is promoted as an argument of `ModelC`. Users can set the value of `p1`. However, as `p2` isn't listed in the model definition, its initial guess can't be specified while creating an instance of `ModelC`.
+Partial systems can be extended in a higher system in two ways:
 
-```julia
-julia> @mtkbuild model_c2 = ModelC(; p1 = 2.0)
+  - `@extend PartialSystem(var1 = value1)`
+    
+      + This is the recommended way of extending a base system.
+      + The default values for the arguments of the base system can be declared in the `@extend` statement.
+      + Note that all keyword arguments of the base system are added as the keyword arguments of the main system.
 
-```
+  - `@extend var_to_unpack1, var_to_unpack2 = partial_sys = PartialSystem(var1 = value1)`
+    
+      + In this method: explicitly list the variables that should be unpacked, provide a name for the partial system and declare the base system.
+      + Note that only the arguments listed out in the declaration of the base system and unpacked variables (here: `var1`, `var_to_unpack1`, `var_to_unpack2`) are added as the keyword arguments of the higher system.
 
 #### `@components` begin block
 
@@ -325,11 +329,11 @@ For example, the structure of `ModelC` is:
 julia> ModelC.structure
 Dict{Symbol, Any} with 10 entries:
   :components            => Any[Union{Expr, Symbol}[:model_a, :ModelA], Union{Expr, Symbol}[:model_array_a, :ModelA, :(1:N)], Union{Expr, Symbol}[:model_array_b, :ModelA, :(1:N)]]
-  :variables             => Dict{Symbol, Dict{Symbol, Any}}(:v=>Dict(:default=>:v_var, :type=>Real), :v_for_defaults=>Dict(:type=>Real))
+  :variables             => Dict{Symbol, Dict{Symbol, Any}}(:v=>Dict(:default=>:v_var, :type=>Real), :v_array=>Dict(:value=>nothing, :type=>Real, :size=>(:N, :M)), :v_for_defaults=>Dict(:type=>Real))
   :icon                  => URI("https://github.com/SciML/SciMLDocs/blob/main/docs/src/assets/logo.png")
-  :kwargs                => Dict{Symbol, Dict}(:f => Dict(:value => :sin), :N => Dict(:value => 2), :M => Dict(:value => 3), :v => Dict{Symbol, Any}(:value => :v_var, :type => Real), :v_for_defaults => Dict{Symbol, Union{Nothing, DataType}}(:value => nothing, :type => Real), :p1 => Dict(:value => nothing)),
-  :structural_parameters => Dict{Symbol, Dict}(:f => Dict(:value => :sin), :N => Dict(:value => 2), :M => Dict(:value => 3))
-  :independent_variable  => t
+  :kwargs                => Dict{Symbol, Dict}(:f=>Dict(:value=>:sin), :p2=>Dict(:value=>NoValue()), :N=>Dict(:value=>2), :M=>Dict(:value=>3), :v=>Dict{Symbol, Any}(:value=>:v_var, :type=>Real), :v_array=>Dict{Symbol, Any}(:value=>nothing, :type=>Real, :size=>(:N, :M)), :v_for_defaults=>Dict{Symbol, Union{Nothing, DataType}}(:value=>nothing, :type=>Real), :p1=>Dict(:value=>1))
+  :structural_parameters => Dict{Symbol, Dict}(:f=>Dict(:value=>:sin), :N=>Dict(:value=>2), :M=>Dict(:value=>3))
+  :independent_variable  => :t
   :constants             => Dict{Symbol, Dict}(:c=>Dict{Symbol, Any}(:value=>1, :type=>Int64, :description=>"Example constant."))
   :extend                => Any[[:p2, :p1], Symbol("#mtkmodel__anonymous__ModelB"), :ModelB]
   :defaults              => Dict{Symbol, Any}(:v_for_defaults=>2.0)
diff --git a/src/systems/model_parsing.jl b/src/systems/model_parsing.jl
index 1298d72506..61749f944e 100644
--- a/src/systems/model_parsing.jl
+++ b/src/systems/model_parsing.jl
@@ -717,7 +717,7 @@ function parse_structural_parameters!(exprs, sps, dict, mod, body, kwargs)
     end
 end
 
-function extend_args!(a, b, dict, expr, kwargs, varexpr, has_param = false)
+function extend_args!(a, b, dict, expr, kwargs, has_param = false)
     # Whenever `b` is a function call, skip the first arg aka the function name.
     # Whenever it is a kwargs list, include it.
     start = b.head == :call ? 2 : 1
@@ -734,22 +734,18 @@ function extend_args!(a, b, dict, expr, kwargs, varexpr, has_param = false)
                         b.args[i] = Expr(:parameters, x)
                     end
                 end
-                push!(kwargs, Expr(:kw, x, nothing))
                 dict[:kwargs][x] = Dict(:value => nothing)
             end
             Expr(:kw, x) => begin
-                push!(kwargs, Expr(:kw, x, nothing))
                 dict[:kwargs][x] = Dict(:value => nothing)
             end
             Expr(:kw, x, y) => begin
-                b.args[i] = Expr(:kw, x, x)
-                push!(varexpr.args, :($x = $x === nothing ? $y : $x))
-                push!(kwargs, Expr(:kw, x, nothing))
-                dict[:kwargs][x] = Dict(:value => nothing)
+                push!(kwargs, Expr(:kw, x, y))
+                dict[:kwargs][x] = Dict(:value => y)
             end
             Expr(:parameters, x...) => begin
                 has_param = true
-                extend_args!(a, arg, dict, expr, kwargs, varexpr, has_param)
+                extend_args!(a, arg, dict, expr, kwargs, has_param)
             end
             _ => error("Could not parse $arg of component $a")
         end
@@ -758,17 +754,31 @@ end
 
 const EMPTY_DICT = Dict()
 const EMPTY_VoVoSYMBOL = Vector{Symbol}[]
+const EMPTY_VoVoVoSYMBOL = Vector{Symbol}[[]]
 
-function Base.names(model::Model)
+function _arguments(model::Model)
     vars = keys(get(model.structure, :variables, EMPTY_DICT))
     vars = union(vars, keys(get(model.structure, :parameters, EMPTY_DICT)))
-    vars = union(vars,
-        map(first, get(model.structure, :components, EMPTY_VoVoSYMBOL)))
+    vars = union(vars, first(get(model.structure, :extend, EMPTY_VoVoVoSYMBOL)))
     collect(vars)
 end
 
-function _parse_extend!(ext, a, b, dict, expr, kwargs, varexpr, vars)
-    extend_args!(a, b, dict, expr, kwargs, varexpr)
+function Base.names(model::Model)
+    collect(union(_arguments(model),
+        map(first, get(model.structure, :components, EMPTY_VoVoSYMBOL))))
+end
+
+function _parse_extend!(ext, a, b, dict, expr, kwargs, vars, additional_args)
+    extend_args!(a, b, dict, expr, kwargs)
+    b.args = [b.args[1]]
+    allvars = union(vars.args, additional_args.args)
+    for var in allvars
+        push!(b.args, Expr(:kw, var, var))
+        if !haskey(dict[:kwargs], var)
+            push!(dict[:kwargs], var => Dict(:value => NO_VALUE))
+            push!(kwargs, Expr(:kw, var, NO_VALUE))
+        end
+    end
     ext[] = a
     push!(b.args, Expr(:kw, :name, Meta.quot(a)))
     push!(expr.args, :($a = $b))
@@ -780,8 +790,6 @@ end
 
 function parse_extend!(exprs, ext, dict, mod, body, kwargs)
     expr = Expr(:block)
-    varexpr = Expr(:block)
-    push!(exprs, varexpr)
     push!(exprs, expr)
     body = deepcopy(body)
     MLStyle.@match body begin
@@ -792,7 +800,7 @@ function parse_extend!(exprs, ext, dict, mod, body, kwargs)
                     error("`@extend` destructuring only takes an tuple as LHS. Got $body")
                 end
                 a, b = b.args
-                _parse_extend!(ext, a, b, dict, expr, kwargs, varexpr, vars)
+                _parse_extend!(ext, a, b, dict, expr, kwargs, vars, Expr(:tuple))
             else
                 error("When explicitly destructing in `@extend` please use the syntax: `@extend a, b = oneport = OnePort()`.")
             end
@@ -802,8 +810,11 @@ function parse_extend!(exprs, ext, dict, mod, body, kwargs)
             b = body
             if (model = getproperty(mod, b.args[1])) isa Model
                 vars = Expr(:tuple)
-                append!(vars.args, names(model))
-                _parse_extend!(ext, a, b, dict, expr, kwargs, varexpr, vars)
+                append!(vars.args, _arguments(model))
+                additional_args = Expr(:tuple)
+                append!(additional_args.args,
+                    keys(get(model.structure, :structural_parameters, EMPTY_DICT)))
+                _parse_extend!(ext, a, b, dict, expr, kwargs, vars, additional_args)
             else
                 error("Cannot infer the exact `Model` that `@extend $(body)` refers." *
                       " Please specify the names that it brings into scope by:" *
@@ -1104,7 +1115,7 @@ function parse_icon!(body::String, dict, icon, mod)
     icon_dir = get(ENV, "MTK_ICONS_DIR", joinpath(DEPOT_PATH[1], "mtk_icons"))
     dict[:icon] = icon[] = if isfile(body)
         URI("file:///" * abspath(body))
-    elseif (iconpath = joinpath(icon_dir, body); isfile(iconpath))
+    elseif (iconpath = abspath(joinpath(icon_dir, body)); isfile(iconpath))
         URI("file:///" * abspath(iconpath))
     elseif try
         Base.isvalid(URI(body))
@@ -1115,6 +1126,7 @@ function parse_icon!(body::String, dict, icon, mod)
     elseif (_body = lstrip(body); startswith(_body, r"<\?xml|<svg"))
         String(_body) # With Julia-1.10 promoting `SubString{String}` to `String` can be dropped.
     else
+        @info iconpath=joinpath(icon_dir, body) isfile(iconpath) body
         error("\n$body is not a valid icon")
     end
 end
diff --git a/test/model_parsing.jl b/test/model_parsing.jl
index 3e2bd2045c..620ecd8a72 100644
--- a/test/model_parsing.jl
+++ b/test/model_parsing.jl
@@ -153,7 +153,7 @@ R_val = 20u"Ω"
 res__R = 100u"Ω"
 @mtkbuild rc = RC(; C_val, R_val, resistor.R = res__R)
 prob = ODEProblem(rc, [], (0, 1e9))
-sol = solve(prob, Rodas5P())
+sol = solve(prob)
 defs = ModelingToolkit.defaults(rc)
 @test sol[rc.capacitor.v, end] ≈ defs[rc.constant.k]
 resistor = getproperty(rc, :resistor; namespace = false)
@@ -459,9 +459,10 @@ end
     @test A.structure[:parameters] == Dict(:p => Dict(:type => Real))
     @test A.structure[:extend] == [[:e], :extended_e, :E]
     @test A.structure[:equations] == ["e ~ 0"]
-    @test A.structure[:kwargs] ==
-          Dict{Symbol, Dict}(:p => Dict(:value => nothing, :type => Real),
-        :v => Dict(:value => nothing, :type => Real))
+    @test A.structure[:kwargs] == Dict{Symbol, Dict}(
+        :p => Dict{Symbol, Union{Nothing, DataType}}(:value => nothing, :type => Real),
+        :e => Dict(:value => ModelingToolkit.NoValue()),
+        :v => Dict{Symbol, Union{Nothing, DataType}}(:value => nothing, :type => Real))
     @test A.structure[:components] == [[:cc, :C]]
 end
 
@@ -910,3 +911,25 @@ end
         end),
         false)
 end
+
+@mtkmodel BaseSys begin
+    @parameters begin
+        p1
+        p2
+    end
+    @variables begin
+        v1(t)
+    end
+end
+
+@testset "Arguments of base system" begin
+    @mtkmodel MainSys begin
+        @extend BaseSys(p1 = 1)
+    end
+
+    @test names(MainSys) == [:p2, :p1, :v1]
+    @named main_sys = MainSys(p1 = 11, p2 = 12, v1 = 13)
+    @test getdefault(main_sys.p1) == 11
+    @test getdefault(main_sys.p2) == 12
+    @test getdefault(main_sys.v1) == 13
+end