Fixes #32923

src/services/formatting/smartIndenter.ts

@@ -539,10 +539,14 @@ namespace ts.formatting {
                     return true;
                 case SyntaxKind.VariableDeclaration:
                 case SyntaxKind.PropertyAssignment:
+                case SyntaxKind.BinaryExpression:
                     if (!settings.indentMultiLineObjectLiteralBeginningOnBlankLine && sourceFile && childKind === SyntaxKind.ObjectLiteralExpression) { // TODO: GH#18217
                         return rangeIsOnOneLine(sourceFile, child!);
                     }
-                    return true;
+                    if (parent.kind !== SyntaxKind.BinaryExpression) {
+                        return true;
+                    }
+                    break;
                 case SyntaxKind.DoStatement:
                 case SyntaxKind.WhileStatement:
                 case SyntaxKind.ForInStatement:

tests/cases/fourslash/formattingObjectLiteralOpenCurlyNewlineAssignment.ts

@@ -0,0 +1,47 @@
+/// <reference path='fourslash.ts' />
+
+////
+//// var obj = {};
+//// obj =
+//// {
+////     prop: 3
+//// };
+////  
+//// var obj2 = obj ||
+//// {
+////     prop: 0
+//// }
+////
+
+format.document();
+verify.currentFileContentIs(
+`
+var obj = {};
+obj =
+{
+    prop: 3
+};
+
+var obj2 = obj ||
+{
+    prop: 0
+}
+`
+);
+
+format.setOption("indentMultiLineObjectLiteralBeginningOnBlankLine", true);
+format.document();
+verify.currentFileContentIs(
+`
+var obj = {};
+obj =
+    {
+        prop: 3
+    };
+
+var obj2 = obj ||
+    {
+        prop: 0
+    }
+`
+);