diff --git a/transform/external.go b/transform/external.go
index 1e50701b7..9e24eb83e 100644
--- a/transform/external.go
+++ b/transform/external.go
@@ -33,28 +33,21 @@ func transformMaybeExternal(data any, p tree.Path) (any, error) {
 	}
 
 	if ext, ok := resource["external"]; ok {
-		external, ok := ext.(map[string]any)
-		if !ok {
-			return resource, nil
-		}
 		name, named := resource["name"]
-		extname, extNamed := external["name"]
-		if extNamed {
-			logrus.Warnf("%s: external.name is deprecated. Please set name and external: true", p)
-			if named && extname != name {
-				return nil, fmt.Errorf("%s: name and external.name conflict; only use name", p)
-			}
-		}
-		if !named {
-			if extNamed {
-				// adopt (deprecated) external.name if set
-				resource["name"] = extname
-			} else {
-				// otherwise, just replicate the mapping key for convenience
-				resource["name"] = p
+		if external, ok := ext.(map[string]any); ok {
+			resource["external"] = true
+			if extname, extNamed := external["name"]; extNamed {
+				logrus.Warnf("%s: external.name is deprecated. Please set name and external: true", p)
+				if named && extname != name {
+					return nil, fmt.Errorf("%s: name and external.name conflict; only use name", p)
+				}
+				if !named {
+					// adopt (deprecated) external.name if set
+					resource["name"] = extname
+					return resource, nil
+				}
 			}
 		}
-		resource["external"] = true
 	}
 
 	return resource, nil
diff --git a/transform/external_test.go b/transform/external_test.go
new file mode 100644
index 000000000..56fa33a7c
--- /dev/null
+++ b/transform/external_test.go
@@ -0,0 +1,83 @@
+/*
+   Copyright 2020 The Compose Specification Authors.
+
+   Licensed under the Apache License, Version 2.0 (the "License");
+   you may not use this file except in compliance with the License.
+   You may obtain a copy of the License at
+
+       http://www.apache.org/licenses/LICENSE-2.0
+
+   Unless required by applicable law or agreed to in writing, software
+   distributed under the License is distributed on an "AS IS" BASIS,
+   WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+   See the License for the specific language governing permissions and
+   limitations under the License.
+*/
+
+package transform
+
+import (
+	"testing"
+
+	"github.com/compose-spec/compose-go/v2/tree"
+	"gotest.tools/v3/assert"
+)
+
+func TestNotExternal(t *testing.T) {
+	ssh, err := transformMaybeExternal(map[string]any{
+		"driver": "foo",
+	}, tree.NewPath("resources.test"))
+	assert.NilError(t, err)
+	assert.DeepEqual(t, ssh, map[string]any{
+		"driver": "foo",
+	})
+}
+
+func TestExternalNamed(t *testing.T) {
+	ssh, err := transformMaybeExternal(map[string]any{
+		"external": true,
+		"name":     "foo",
+	}, tree.NewPath("resources.test"))
+	assert.NilError(t, err)
+	assert.DeepEqual(t, ssh, map[string]any{
+		"external": true,
+		"name":     "foo",
+	})
+}
+
+func TestExternalUnnamed(t *testing.T) {
+	ssh, err := transformMaybeExternal(map[string]any{
+		"external": true,
+	}, tree.NewPath("resources.test"))
+	assert.NilError(t, err)
+	assert.DeepEqual(t, ssh, map[string]any{
+		"external": true,
+	})
+}
+
+func TestExternalLegacy(t *testing.T) {
+	ssh, err := transformMaybeExternal(map[string]any{
+		"external": map[string]any{
+			"name": "foo",
+		},
+	}, tree.NewPath("resources.test"))
+	assert.NilError(t, err)
+	assert.DeepEqual(t, ssh, map[string]any{
+		"external": true,
+		"name":     "foo",
+	})
+}
+
+func TestExternalLegacyNamed(t *testing.T) {
+	ssh, err := transformMaybeExternal(map[string]any{
+		"external": map[string]any{
+			"name": "foo",
+		},
+		"name": "foo",
+	}, tree.NewPath("resources.test"))
+	assert.NilError(t, err)
+	assert.DeepEqual(t, ssh, map[string]any{
+		"external": true,
+		"name":     "foo",
+	})
+}