diff --git a/synapse/events/builder.py b/synapse/events/builder.py
index 487f58e6d6..ef60f252e5 100644
--- a/synapse/events/builder.py
+++ b/synapse/events/builder.py
@@ -146,7 +146,9 @@ class EventBuilder:
                 based on the prev_events.
             prev_state_events: The event IDs to use as prev_state_events.
                 Only applicable on MSC4242 state DAG rooms. If this is supplied, auth_event_ids
-                must not be specified.
+                must not be specified unless this event is part of a batch such that the builder
+                will be unable to compute the auth_event_ids due to the events not being persisted
+                yet.
         Returns:
             The signed and hashed event.
         """
diff --git a/synapse/handlers/room.py b/synapse/handlers/room.py
index a4b18b7173..66b4d4440c 100644
--- a/synapse/handlers/room.py
+++ b/synapse/handlers/room.py
@@ -1487,7 +1487,9 @@ class RoomCreationHandler:
         # the most recently created event
         prev_event: list[str] = []
         # the most recently created state event
-        prev_state_event: list[str] = []
+        prev_state_event: list[str] | None = (
+            [] if room_version.msc4242_state_dags else None
+        )
 
         # a map of event types, state keys -> event_ids. We collect these mappings this as events are
         # created (but not persisted to the db) to determine state for future created events
@@ -1574,7 +1576,8 @@ class RoomCreationHandler:
             ignore_shadow_ban=True,
         )
         last_sent_event_id = ev.event_id
-        prev_state_event = [ev.event_id]
+        if room_version.msc4242_state_dags:
+            prev_state_event = [ev.event_id]
 
         member_event_id, _ = await self.room_member_handler.update_membership(
             creator,
@@ -1589,7 +1592,8 @@ class RoomCreationHandler:
             prev_state_events=prev_state_event,
         )
         prev_event = [member_event_id]
-        prev_state_event = [member_event_id]
+        if room_version.msc4242_state_dags:
+            prev_state_event = [member_event_id]
 
         # update the depth and state map here as the membership event has been created
         # through a different code path
diff --git a/tests/storage/test_msc4242_state_dag.py b/tests/storage/test_msc4242_state_dag.py
index 6107ce66f6..9fe1dcabd4 100644
--- a/tests/storage/test_msc4242_state_dag.py
+++ b/tests/storage/test_msc4242_state_dag.py
@@ -57,16 +57,16 @@ class MSC4242StateDagsTests(HomeserverTestCase):
         for non-state events.
         """
         # they don't change for messages
-        first_id = self.helper.send(self.room_id, body="test1")["event_id"]
-        first_pae = self._get_prev_state_events(first_id)
-        assert len(first_pae) == 1
+        first_event_id = self.helper.send(self.room_id, body="test1")["event_id"]
+        first_prev_state_event = self._get_prev_state_events(first_event_id)
+        assert len(first_prev_state_event) == 1
         second_id = self.helper.send(self.room_id, body="test2")["event_id"]
-        second_pae = self._get_prev_state_events(second_id)
-        assert len(second_pae) == 1
-        self.assertEquals(first_pae, second_pae)
+        second_prev_state_event = self._get_prev_state_events(second_id)
+        assert len(second_prev_state_event) == 1
+        self.assertEquals(first_prev_state_event, second_prev_state_event)
 
-        # send another auth event, which should change the prev_state_events on subsequent events
-        jr_id = self.helper.send_state(
+        # send an auth event, which should change the prev_state_events on *subsequent* events
+        join_rule_state_event_id = self.helper.send_state(
             self.room_id,
             EventTypes.JoinRules,
             {
@@ -74,25 +74,29 @@ class MSC4242StateDagsTests(HomeserverTestCase):
             },
             tok="nope",
         )["event_id"]
-        jr_pae = self._get_prev_state_events(jr_id)
-        self.assertEquals(second_pae, jr_pae)
+        join_rule_prev_state_event_ids = self._get_prev_state_events(
+            join_rule_state_event_id
+        )
+        self.assertEquals(second_prev_state_event, join_rule_prev_state_event_ids)
 
         # prev_state_events should always point to the join rule now
-        third_id = self.helper.send(self.room_id, body="test3")["event_id"]
-        third_pae = self._get_prev_state_events(third_id)
-        self.assertEquals(third_pae, [jr_id])
-        # ..including for non-auth state
-        # TODO FIXME KEGAN
-        # name_id = self.helper.send_state(
-        #    self.room_id,
-        #    EventTypes.Name,
-        #    {
-        #        "name": "State DAGs!",
-        #    },
-        #    tok="nope",
-        # )["event_id"]
-        # name_pae = self._get_prev_state_events(name_id)
-        # self.assertEquals(name_pae, [jr_id])
+        third_event_id = self.helper.send(self.room_id, body="test3")["event_id"]
+        third_prev_state_event = self._get_prev_state_events(third_event_id)
+        self.assertEquals(third_prev_state_event, [join_rule_state_event_id])
+        # and non-auth state should also update prev_state_events
+        name_state_event_id = self.helper.send_state(
+            self.room_id,
+            EventTypes.Name,
+            {
+                "name": "State DAGs!",
+            },
+            tok="nope",
+        )["event_id"]
+        name_prev_state_event_ids = self._get_prev_state_events(name_state_event_id)
+        self.assertEquals(name_prev_state_event_ids, [join_rule_state_event_id])
+        fourth_event_id = self.helper.send(self.room_id, body="test4")["event_id"]
+        fourth_prev_state_event = self._get_prev_state_events(fourth_event_id)
+        self.assertEquals(fourth_prev_state_event, [name_state_event_id])
 
 
 class MSC4242EventPersistenceAuthDagsStoreTestCase(HomeserverTestCase):
@@ -135,6 +139,7 @@ class MSC4242EventPersistenceAuthDagsStoreTestCase(HomeserverTestCase):
         id: str,
         prev_state_events: list[str],
         rejected: bool = False,
+        soft_failed: bool = False,
     ) -> tuple[FrozenEventVMSC4242, EventContext]:
         ev = make_event_from_dict(
             {
@@ -149,6 +154,8 @@ class MSC4242EventPersistenceAuthDagsStoreTestCase(HomeserverTestCase):
             },
             room_version=RoomVersions.MSC4242v12,
         )
+        if soft_failed:
+            ev.internal_metadata.soft_failed = True
         assert isinstance(ev, FrozenEventVMSC4242)
         ev._event_id = id
         ctx = Mock()
@@ -162,17 +169,23 @@ class MSC4242EventPersistenceAuthDagsStoreTestCase(HomeserverTestCase):
         want_new_extrems: set[str],
         want_raises: bool = False,
     ) -> None:
-        promise = self.persistence._calculate_new_state_dag_extremities(
+        """
+        Tests the logic of _calculate_new_state_dag_extremities.
+
+        Tests that the new extremities calculated as a result of processing current_fwds and new_events
+        matches want_new_extrems or raises if want_raises is True.
+        """
+        coroutine = self.persistence._calculate_new_state_dag_extremities(
             self.room_id,
             frozenset(current_fwds),
             new_events,
         )
         if want_raises:
-            f = self.get_failure(promise, SynapseError)
+            f = self.get_failure(coroutine, SynapseError)
             assert f is not None
             return
 
-        new_extrems = set(self.get_success(promise))
+        new_extrems = set(self.get_success(coroutine))
         self.assertEqual(
             new_extrems,
             want_new_extrems,
diff --git a/tests/test_event_auth.py b/tests/test_event_auth.py
index 3b3d3c0ffa..9258f0d4dc 100644
--- a/tests/test_event_auth.py
+++ b/tests/test_event_auth.py
@@ -389,7 +389,6 @@ class EventAuthTestCase(unittest.TestCase):
 
         create_event = make_event_from_dict(
             {
-                "room_id": TEST_ROOM_ID,
                 "type": "m.room.create",
                 "sender": creator,
                 "state_key": "",
@@ -399,9 +398,22 @@ class EventAuthTestCase(unittest.TestCase):
             },
             room_version,
         )
+        create_event_2 = make_event_from_dict(
+            {
+                "type": "m.room.create",
+                "sender": creator,
+                "state_key": "",
+                "content": {"creator": creator, "another": "room"},
+                "prev_events": [],
+                "prev_state_events": [],
+            },
+            room_version,
+        )
+        room_id = create_event.room_id
+        another_room_id = create_event_2.room_id
         join_event = make_event_from_dict(
             {
-                "room_id": TEST_ROOM_ID,
+                "room_id": room_id,
                 "type": "m.room.member",
                 "sender": creator,
                 "state_key": creator,
@@ -414,7 +426,7 @@ class EventAuthTestCase(unittest.TestCase):
         )
         event_in_another_room = make_event_from_dict(
             {
-                "room_id": f"!another_room:{TEST_DOMAIN}",
+                "room_id": another_room_id,
                 "type": "m.room.join_rules",
                 "sender": creator,
                 "state_key": "",
@@ -427,7 +439,7 @@ class EventAuthTestCase(unittest.TestCase):
         )
         msg_event = make_event_from_dict(
             {
-                "room_id": TEST_ROOM_ID,
+                "room_id": room_id,
                 "type": "m.room.message",
                 "sender": creator,
                 "content": {"msgtype": "m.text", "body": "I am a message"},
@@ -439,7 +451,7 @@ class EventAuthTestCase(unittest.TestCase):
         )
         rejected_event = make_event_from_dict(
             {
-                "room_id": TEST_ROOM_ID,
+                "room_id": room_id,
                 "type": "m.room.name",
                 "sender": creator,
                 "state_key": "",
@@ -457,24 +469,18 @@ class EventAuthTestCase(unittest.TestCase):
         rejecting_test_cases = [
             RejectingTestCase(
                 name="create event has prev_state_events",
-                events_in_store=[create_event, join_event],
+                events_in_store=[],
                 test_event=make_event_from_dict(
                     {
-                        "room_id": TEST_ROOM_ID,
                         "type": "m.room.create",
                         "sender": creator,
                         "state_key": "",
                         "content": {"creator": creator},
                         "prev_events": [],
-                        "prev_state_events": [join_event.event_id],
+                        "prev_state_events": [create_event.event_id],
                     },
                     room_version,
-                    {
-                        "calculated_auth_event_ids": [
-                            create_event.event_id,
-                            join_event.event_id,
-                        ]
-                    },
+                    {},
                 ),
             ),
             RejectingTestCase(
@@ -482,7 +488,7 @@ class EventAuthTestCase(unittest.TestCase):
                 events_in_store=[create_event, join_event, event_in_another_room],
                 test_event=make_event_from_dict(
                     {
-                        "room_id": TEST_ROOM_ID,
+                        "room_id": room_id,
                         "type": "m.room.name",
                         "sender": creator,
                         "state_key": "",
@@ -504,7 +510,7 @@ class EventAuthTestCase(unittest.TestCase):
                 events_in_store=[create_event, join_event, msg_event],
                 test_event=make_event_from_dict(
                     {
-                        "room_id": TEST_ROOM_ID,
+                        "room_id": room_id,
                         "type": "m.room.name",
                         "sender": creator,
                         "state_key": "",
@@ -526,7 +532,7 @@ class EventAuthTestCase(unittest.TestCase):
                 events_in_store=[create_event, join_event, rejected_event],
                 test_event=make_event_from_dict(
                     {
-                        "room_id": TEST_ROOM_ID,
+                        "room_id": room_id,
                         "type": "m.room.name",
                         "sender": creator,
                         "state_key": "",