diff --git a/pkg/config/schema_conversions_test.go b/pkg/config/schema_conversions_test.go
new file mode 100644
index 00000000..1cd93c43
--- /dev/null
+++ b/pkg/config/schema_conversions_test.go
@@ -0,0 +1,170 @@
+// SPDX-FileCopyrightText: 2024 The Crossplane Authors <https://crossplane.io>
+//
+// SPDX-License-Identifier: Apache-2.0
+
+package config
+
+import (
+	"testing"
+
+	"github.com/crossplane/crossplane-runtime/pkg/test"
+	"github.com/google/go-cmp/cmp"
+	"github.com/hashicorp/terraform-plugin-sdk/v2/helper/schema"
+)
+
+func TestSingletonListEmbedder(t *testing.T) {
+	type args struct {
+		resource *schema.Resource
+		name     string
+	}
+	type want struct {
+		err             error
+		schemaOpts      SchemaElementOptions
+		conversionPaths map[string]string
+	}
+	tests := map[string]struct {
+		reason string
+		args   args
+		want   want
+	}{
+		"SuccessfulRootLevelSingletonListEmbedding": {
+			reason: "Successfully embed a root-level singleton list in the resource schema.",
+			args: args{
+				resource: &schema.Resource{
+					Schema: map[string]*schema.Schema{
+						"singleton_list": {
+							Type:     schema.TypeList,
+							MaxItems: 1,
+							Elem: &schema.Resource{
+								Schema: map[string]*schema.Schema{
+									"element": {
+										Type: schema.TypeString,
+									},
+								},
+							},
+						},
+					},
+				},
+				name: "test_resource",
+			},
+			want: want{
+				schemaOpts: map[string]*SchemaElementOption{
+					"singleton_list": {
+						EmbeddedObject: true,
+					},
+				},
+				conversionPaths: map[string]string{
+					"singleton_list": "singletonList",
+				},
+			},
+		},
+		"NoEmbeddingForMultiItemList": {
+			reason: "Do not embed a list with a MaxItems constraint greater than 1.",
+			args: args{
+				resource: &schema.Resource{
+					Schema: map[string]*schema.Schema{
+						"multiitem_list": {
+							Type:     schema.TypeList,
+							MaxItems: 2,
+							Elem: &schema.Resource{
+								Schema: map[string]*schema.Schema{
+									"element": {
+										Type: schema.TypeString,
+									},
+								},
+							},
+						},
+					},
+				},
+				name: "test_resource",
+			},
+			want: want{
+				schemaOpts:      map[string]*SchemaElementOption{},
+				conversionPaths: map[string]string{},
+			},
+		},
+		"NoEmbeddingForNonList": {
+			reason: "Do not embed a non-list schema.",
+			args: args{
+				resource: &schema.Resource{
+					Schema: map[string]*schema.Schema{
+						"invalid": {
+							Type: schema.TypeInvalid,
+							Elem: &schema.Resource{
+								Schema: map[string]*schema.Schema{
+									"element": {
+										Type: schema.TypeString,
+									},
+								},
+							},
+						},
+					},
+				},
+				name: "test_resource",
+			},
+			want: want{
+				schemaOpts:      map[string]*SchemaElementOption{},
+				conversionPaths: map[string]string{},
+			},
+		},
+		"SuccessfulNestedSingletonListEmbedding": {
+			reason: "Successfully embed a nested singleton list in the resource schema.",
+			args: args{
+				resource: &schema.Resource{
+					Schema: map[string]*schema.Schema{
+						"parent_list": {
+							Type:     schema.TypeList,
+							MaxItems: 1,
+							Elem: &schema.Resource{
+								Schema: map[string]*schema.Schema{
+									"child_list": {
+										Type:     schema.TypeList,
+										MaxItems: 1,
+										Elem: &schema.Resource{
+											Schema: map[string]*schema.Schema{
+												"element": {
+													Type: schema.TypeString,
+												},
+											},
+										},
+									},
+								},
+							},
+						},
+					},
+				},
+				name: "test_resource",
+			},
+			want: want{
+				schemaOpts: map[string]*SchemaElementOption{
+					"parent_list": {
+						EmbeddedObject: true,
+					},
+					"parent_list.child_list": {
+						EmbeddedObject: true,
+					},
+				},
+				conversionPaths: map[string]string{
+					"parent_list":               "parentList",
+					"parent_list[*].child_list": "parentList[*].childList",
+				},
+			},
+		},
+	}
+	for n, tt := range tests {
+		t.Run(n, func(t *testing.T) {
+			e := &SingletonListEmbedder{}
+			r := DefaultResource(tt.args.name, tt.args.resource, nil, nil)
+			err := traverseSchemas(tt.args.name, tt.args.resource, r, e)
+			if diff := cmp.Diff(tt.want.err, err, test.EquateErrors()); diff != "" {
+				t.Fatalf("\n%s\ntraverseSchemas(name, schema, ...): -wantErr, +gotErr:\n%s", tt.reason, diff)
+			}
+			if diff := cmp.Diff(tt.want.schemaOpts, r.SchemaElementOptions); diff != "" {
+				t.Errorf("\n%s\ntraverseSchemas(name, schema, ...): -wantOptions, +gotOptions:\n%s", tt.reason, diff)
+			}
+			if diff := cmp.Diff(tt.want.conversionPaths, r.listConversionPaths); diff != "" {
+				t.Errorf("\n%s\ntraverseSchemas(name, schema, ...): -wantPaths, +gotPaths:\n%s", tt.reason, diff)
+			}
+		})
+	}
+}