diff --git a/src/core/utilities.js b/src/core/utilities.js
index 19285a256..a9dc85999 100644
--- a/src/core/utilities.js
+++ b/src/core/utilities.js
@@ -75,9 +75,9 @@ export function objectValuesSubset (obj, model) {
 }
 
 // Support: IE 11, iOS 7-8
-export function extend (a, b, undefOnly) {
+export function extend (a, b, undefOnly, allProperties) {
   for (const prop in b) {
-    if (hasOwn.call(b, prop)) {
+    if (hasOwn.call(b, prop) || allProperties) {
       if (b[prop] === undefined) {
         delete a[prop];
       } else if (!(undefOnly && typeof a[prop] !== 'undefined')) {
diff --git a/src/module.js b/src/module.js
index bd3614c72..8990ca25c 100644
--- a/src/module.js
+++ b/src/module.js
@@ -21,9 +21,9 @@ function createModule (name, testEnvironment, modifiers) {
   const skip = (parentModule !== null && parentModule.skip) || modifiers.skip;
   const todo = (parentModule !== null && parentModule.todo) || modifiers.todo;
 
-  const env = {};
+  let env = {};
   if (parentModule) {
-    extend(env, parentModule.testEnvironment);
+    env = Object.create(parentModule.testEnvironment || {});
   }
   extend(env, testEnvironment);
 
diff --git a/src/test.js b/src/test.js
index 300feedf8..e75f57110 100644
--- a/src/test.js
+++ b/src/test.js
@@ -158,8 +158,6 @@ Test.prototype = {
     return moduleStartChain.then(() => {
       config.current = this;
 
-      this.testEnvironment = extend({}, module.testEnvironment);
-
       this.started = performance.now();
       emit('testStart', this.testReport.start(true));
       return runLoggingCallbacks('testStart', {
@@ -251,17 +249,19 @@ Test.prototype = {
 
   queueHook (hook, hookName, hookOwner) {
     const callHook = () => {
-      const promise = hook.call(this.testEnvironment, this.assert);
+      let promise;
+      if (hookName === 'before' || hookName === 'after') {
+        // before and after hooks are called with the owning module's testEnvironment
+        promise = hook.call(hookOwner.testEnvironment, this.assert);
+      } else {
+        promise = hook.call(this.testEnvironment, this.assert);
+      }
       this.resolvePromise(promise, hookName);
     };
 
     const runHook = () => {
-      if (hookName === 'before') {
-        if (hookOwner.testsRun !== 0) {
-          return;
-        }
-
-        this.preserveEnvironment = true;
+      if (hookName === 'before' && hookOwner.testsRun !== 0) {
+        return;
       }
 
       // The 'after' hook should only execute when there are not tests left and
@@ -483,13 +483,6 @@ Test.prototype = {
     }
   },
 
-  preserveTestEnvironment: function () {
-    if (this.preserveEnvironment) {
-      this.module.testEnvironment = this.testEnvironment;
-      this.testEnvironment = extend({}, this.module.testEnvironment);
-    }
-  },
-
   queue () {
     const test = this;
 
@@ -507,7 +500,7 @@ Test.prototype = {
         ...test.hooks('before'),
 
         function () {
-          test.preserveTestEnvironment();
+          test.testEnvironment = extend({}, test.module.testEnvironment, false, true);
         },
 
         ...test.hooks('beforeEach'),
diff --git a/test/main/async.js b/test/main/async.js
index fff0292d3..dbf597dcf 100644
--- a/test/main/async.js
+++ b/test/main/async.js
@@ -242,18 +242,22 @@ QUnit.module('assert.async', function () {
     QUnit.test('test', function () {});
   });
 
+  var inBeforeHookModuleState;
   QUnit.module('in before hook', {
     before: function (assert) {
       var done = assert.async();
-      var testContext = this;
       setTimeout(function () {
-        testContext.state = 'before';
+        inBeforeHookModuleState = 'before';
         done();
       });
     }
   }, function () {
     QUnit.test('call order', function (assert) {
-      assert.equal(this.state, 'before', 'called before test callback');
+      assert.equal(
+        inBeforeHookModuleState,
+        'before',
+        'called before test callback'
+      );
     });
   });
 
@@ -289,18 +293,18 @@ QUnit.module('assert.async', function () {
     });
   });
 
+  var inAfterHookModuleState;
   QUnit.module('in after hook', {
     after: function (assert) {
-      assert.equal(this.state, 'done', 'called after test callback');
+      assert.equal(inAfterHookModuleState, 'done', 'called after test callback');
       assert.true(true, 'called before expected assert count is validated');
     }
   }, function () {
     QUnit.test('call order', function (assert) {
       assert.expect(2);
       var done = assert.async();
-      var testContext = this;
       setTimeout(function () {
-        testContext.state = 'done';
+        inAfterHookModuleState = 'done';
         done();
       });
     });
diff --git a/test/main/modules.js b/test/main/modules.js
index 053d6b889..1d6ce05a7 100644
--- a/test/main/modules.js
+++ b/test/main/modules.js
@@ -16,42 +16,36 @@ QUnit.module('QUnit.module', function () {
       // parent > child > one
       // parent > child > two
       'parent-before: (empty)',
-      'child-before: beforeP=1',
-      'parent-beforeEach: beforeP=1 beforeC=1',
-      'child-beforeEach: beforeP=1 beforeC=1 beforeEach=P',
-      'child-test: beforeP=1 beforeC=1 beforeEach=PC',
-      'child-afterEach: beforeP=1 beforeC=1 beforeEach=PC tester=1',
-      'parent-afterEach: beforeP=1 beforeC=1 beforeEach=PC tester=1 afterEach=C',
-      'parent-beforeEach: beforeP=1 beforeC=1',
-      'child-beforeEach: beforeP=1 beforeC=1 beforeEach=P',
-      'child-test: beforeP=1 beforeC=1 beforeEach=PC',
-      'child-afterEach: beforeP=1 beforeC=1 beforeEach=PC tester=2',
-      'parent-afterEach: beforeP=1 beforeC=1 beforeEach=PC tester=2 afterEach=C',
-      'child-after: beforeP=1 beforeC=1 beforeEach=PC tester=2 afterEach=CP',
-      'parent-after: beforeP=1 beforeC=1 beforeEach=PC tester=2 afterEach=CP afterC=1'
+      'child-before: %beforeP=1',
+      'parent-beforeEach: beforeC=1 beforeP=1',
+      'child-beforeEach: beforeC=1 beforeP=1 beforeEach=P',
+      'child-test: beforeC=1 beforeP=1 beforeEach=PC',
+      'child-afterEach: beforeC=1 beforeP=1 beforeEach=PC tester=1',
+      'parent-afterEach: beforeC=1 beforeP=1 beforeEach=PC tester=1 afterEach=C',
+      'parent-beforeEach: beforeC=1 beforeP=1',
+      'child-beforeEach: beforeC=1 beforeP=1 beforeEach=P',
+      'child-test: beforeC=1 beforeP=1 beforeEach=PC',
+      'child-afterEach: beforeC=1 beforeP=1 beforeEach=PC tester=2',
+      'parent-afterEach: beforeC=1 beforeP=1 beforeEach=PC tester=2 afterEach=C',
+      'child-after: beforeC=1 %beforeP=1',
+      'parent-after: beforeP=1'
     ],
-    // FIXME: https://github.com/qunitjs/qunit/issues/1328
-    // - parent test missing own state if there is a child module before the test.
-    // - last test state presists into after()
     'parent with trailing test': [
       // parent > child > one
       // parent > two
       'parent-before: (empty)',
-      'child-before: beforeP=1',
-      'parent-beforeEach: beforeP=1 beforeC=1',
-      'child-beforeEach: beforeP=1 beforeC=1 beforeEach=P',
-      'child-test: beforeP=1 beforeC=1 beforeEach=PC',
-      'child-afterEach: beforeP=1 beforeC=1 beforeEach=PC tester=1',
-      'parent-afterEach: beforeP=1 beforeC=1 beforeEach=PC tester=1 afterEach=C',
-      'child-after: beforeP=1 beforeC=1 beforeEach=PC tester=1 afterEach=CP',
-      'parent-beforeEach: (empty)',
-      'parent-test: beforeEach=P',
-      'parent-afterEach: beforeEach=P tester=2',
-      'parent-after: beforeEach=P tester=2 afterEach=P'
+      'child-before: %beforeP=1',
+      'parent-beforeEach: beforeC=1 beforeP=1',
+      'child-beforeEach: beforeC=1 beforeP=1 beforeEach=P',
+      'child-test: beforeC=1 beforeP=1 beforeEach=PC',
+      'child-afterEach: beforeC=1 beforeP=1 beforeEach=PC tester=1',
+      'parent-afterEach: beforeC=1 beforeP=1 beforeEach=PC tester=1 afterEach=C',
+      'child-after: beforeC=1 %beforeP=1',
+      'parent-beforeEach: beforeP=1',
+      'parent-test: beforeP=1 beforeEach=P',
+      'parent-afterEach: beforeP=1 beforeEach=P tester=2',
+      'parent-after: beforeP=1'
     ],
-
-    // FIXME: https://github.com/qunitjs/qunit/issues/1328
-    // child is missing parent state if there is an initial test before the child module.
     'parent with initial test': [
       // parent > one
       // parent > child > two
@@ -59,14 +53,14 @@ QUnit.module('QUnit.module', function () {
       'parent-beforeEach: beforeP=1',
       'parent-test: beforeP=1 beforeEach=P',
       'parent-afterEach: beforeP=1 beforeEach=P tester=1',
-      'child-before: (empty)',
-      'parent-beforeEach: beforeC=1',
-      'child-beforeEach: beforeC=1 beforeEach=P',
-      'child-test: beforeC=1 beforeEach=PC',
-      'child-afterEach: beforeC=1 beforeEach=PC tester=2',
-      'parent-afterEach: beforeC=1 beforeEach=PC tester=2 afterEach=C',
-      'child-after: beforeC=1 beforeEach=PC tester=2 afterEach=CP',
-      'parent-after: beforeC=1 beforeEach=PC tester=2 afterEach=CP afterC=1'
+      'child-before: %beforeP=1',
+      'parent-beforeEach: beforeC=1 beforeP=1',
+      'child-beforeEach: beforeC=1 beforeP=1 beforeEach=P',
+      'child-test: beforeC=1 beforeP=1 beforeEach=PC',
+      'child-afterEach: beforeC=1 beforeP=1 beforeEach=PC tester=2',
+      'parent-afterEach: beforeC=1 beforeP=1 beforeEach=PC tester=2 afterEach=C',
+      'child-after: beforeC=1 %beforeP=1',
+      'parent-after: beforeP=1'
     ],
 
     // Confirm each step waits for the previous before restoring/saving testEnvironment
@@ -78,34 +72,33 @@ QUnit.module('QUnit.module', function () {
       'parent-beforeEach: beforeP=1',
       'parent-test: beforeP=1 beforeEach=P',
       'parent-afterEach: beforeP=1 beforeEach=P tester=1',
-      'child-before: (empty)',
-      'parent-beforeEach: beforeC=1',
-      'child-beforeEach: beforeC=1 beforeEach=P',
-      'child-test: beforeC=1 beforeEach=PC',
-      'child-afterEach: beforeC=1 beforeEach=PC tester=2',
-      'parent-afterEach: beforeC=1 beforeEach=PC tester=2 afterEach=C',
-      'child-after: beforeC=1 beforeEach=PC tester=2 afterEach=CP',
-      'parent-after: beforeC=1 beforeEach=PC tester=2 afterEach=CP afterC=1'
+      'child-before: %beforeP=1',
+      'parent-beforeEach: beforeC=1 beforeP=1',
+      'child-beforeEach: beforeC=1 beforeP=1 beforeEach=P',
+      'child-test: beforeC=1 beforeP=1 beforeEach=PC',
+      'child-afterEach: beforeC=1 beforeP=1 beforeEach=PC tester=2',
+      'parent-afterEach: beforeC=1 beforeP=1 beforeEach=PC tester=2 afterEach=C',
+      'child-after: beforeC=1 %beforeP=1',
+      'parent-after: beforeP=1'
     ],
     'multiple hooks': [
-
       'parent-before: (empty)',
       'parent-before: beforeP=1',
-      'child-before: beforeP=12',
-      'child-before: beforeP=12 beforeC=1',
-      'parent-beforeEach: beforeP=12 beforeC=12',
-      'parent-beforeEach: beforeP=12 beforeC=12 beforeEach=P1',
-      'child-beforeEach: beforeP=12 beforeC=12 beforeEach=P1P2',
-      'child-beforeEach: beforeP=12 beforeC=12 beforeEach=P1P2C1',
-      'child-test: beforeP=12 beforeC=12 beforeEach=P1P2C1C2',
-      'child-afterEach: beforeP=12 beforeC=12 beforeEach=P1P2C1C2 tester=2',
-      'child-afterEach: beforeP=12 beforeC=12 beforeEach=P1P2C1C2 tester=2 afterEach=C2',
-      'parent-afterEach: beforeP=12 beforeC=12 beforeEach=P1P2C1C2 tester=2 afterEach=C2C1',
-      'parent-afterEach: beforeP=12 beforeC=12 beforeEach=P1P2C1C2 tester=2 afterEach=C2C1P2',
-      'child-after: beforeP=12 beforeC=12 beforeEach=P1P2C1C2 tester=2 afterEach=C2C1P2P1',
-      'child-after: beforeP=12 beforeC=12 beforeEach=P1P2C1C2 tester=2 afterEach=C2C1P2P1 afterC=2',
-      'parent-after: beforeP=12 beforeC=12 beforeEach=P1P2C1C2 tester=2 afterEach=C2C1P2P1 afterC=21',
-      'parent-after: beforeP=12 beforeC=12 beforeEach=P1P2C1C2 tester=2 afterEach=C2C1P2P1 afterC=21 afterP=2'
+      'child-before: %beforeP=12',
+      'child-before: beforeC=1 %beforeP=12',
+      'parent-beforeEach: beforeC=12 beforeP=12',
+      'parent-beforeEach: beforeC=12 beforeP=12 beforeEach=P1',
+      'child-beforeEach: beforeC=12 beforeP=12 beforeEach=P1P2',
+      'child-beforeEach: beforeC=12 beforeP=12 beforeEach=P1P2C1',
+      'child-test: beforeC=12 beforeP=12 beforeEach=P1P2C1C2',
+      'child-afterEach: beforeC=12 beforeP=12 beforeEach=P1P2C1C2 tester=2',
+      'child-afterEach: beforeC=12 beforeP=12 beforeEach=P1P2C1C2 tester=2 afterEach=C2',
+      'parent-afterEach: beforeC=12 beforeP=12 beforeEach=P1P2C1C2 tester=2 afterEach=C2C1',
+      'parent-afterEach: beforeC=12 beforeP=12 beforeEach=P1P2C1C2 tester=2 afterEach=C2C1P2',
+      'child-after: beforeC=12 %beforeP=12',
+      'child-after: beforeC=12 afterC=2 %beforeP=12',
+      'parent-after: beforeP=12',
+      'parent-after: beforeP=12 afterP=2'
     ]
   };