diff --git a/src/lowering/calls.rs b/src/lowering/calls.rs
index 7d06eff9f3..32d603609d 100644
--- a/src/lowering/calls.rs
+++ b/src/lowering/calls.rs
@@ -261,7 +261,7 @@ impl AstVisitorMut for AggregateTypeLowerer {
                 None,
                 original_location.clone(),
             );
-            //If the function has an implicit call (foo(x := 1)), we need to add an assignment to the reference
+            //If the function call has formal arguments (foo(x := 1)), we need to add an assignment to the reference
             let reference = if stmt
                 .parameters
                 .as_ref()
diff --git a/tests/lit/single/methods/method_var_output.st b/tests/lit/single/methods/method_var_output.st
new file mode 100644
index 0000000000..9fb9a26822
--- /dev/null
+++ b/tests/lit/single/methods/method_var_output.st
@@ -0,0 +1,21 @@
+// RUN: (%COMPILE %s && %RUN) | %CHECK %s
+FUNCTION_BLOCK foo
+METHOD baz
+VAR_OUTPUT 
+    out : STRING;
+END_VAR
+    out := 'hello';
+END_METHOD
+END_FUNCTION_BLOCK
+
+FUNCTION main
+VAR 
+    s: STRING;
+    fb: foo;
+END_VAR
+    fb.baz(out => s);
+    printf('%s$n', REF(s)); // CHECK: hello
+    s := '';
+    fb.baz(s); // TODO: need validation here
+    printf('%s$n', REF(s)); // CHECK: hello
+END_FUNCTION
\ No newline at end of file