diff --git a/grade/grading/tests/lib_test.php b/grade/grading/tests/lib_test.php
new file mode 100644
index 0000000000000..e28c85bc175e2
--- /dev/null
+++ b/grade/grading/tests/lib_test.php
@@ -0,0 +1,138 @@
+<?php
+// This file is part of Moodle - http://moodle.org/
+//
+// Moodle is free software: you can redistribute it and/or modify
+// it under the terms of the GNU General Public License as published by
+// the Free Software Foundation, either version 3 of the License, or
+// (at your option) any later version.
+//
+// Moodle is distributed in the hope that it will be useful,
+// but WITHOUT ANY WARRANTY; without even the implied warranty of
+// MERCHANTABILITY or FITNESS FOR A PARTICULAR PURPOSE.  See the
+// GNU General Public License for more details.
+//
+// You should have received a copy of the GNU General Public License
+// along with Moodle.  If not, see <http://www.gnu.org/licenses/>.
+
+/**
+ * Unit tests for the advanced grading subsystem
+ *
+ * @package    core
+ * @subpackage grading
+ * @category   phpunit
+ * @copyright  2011 David Mudrak <david@moodle.com>
+ * @license    http://www.gnu.org/copyleft/gpl.html GNU GPL v3 or later
+ */
+
+defined('MOODLE_INTERNAL') || die();
+
+global $CFG;
+require_once($CFG->dirroot . '/grade/grading/lib.php'); // Include the code to test
+
+
+/**
+ * Makes protected method accessible for testing purposes
+ */
+class testable_grading_manager extends grading_manager {
+}
+
+
+/**
+ * Test cases for the grading manager API
+ */
+class grading_manager_testcase extends advanced_testcase {
+    public function test_basic_instantiation() {
+        $manager1 = get_grading_manager();
+
+        $fakecontext = (object)array(
+            'id'            => 42,
+            'contextlevel'  => CONTEXT_MODULE,
+            'instanceid'    => 22,
+            'path'          => '/1/3/15/42',
+            'depth'         => 4);
+
+        $manager2 = get_grading_manager($fakecontext);
+        $manager3 = get_grading_manager($fakecontext, 'assignment_upload');
+        $manager4 = get_grading_manager($fakecontext, 'assignment_upload', 'submission');
+    }
+
+    public function test_set_and_get_grading_area() {
+        global $DB;
+
+        $this->resetAfterTest(true);
+
+        //sleep(2); // to make sure the microtime will always return unique values // No sleeping in tests!!! --skodak
+        $areaname1 = 'area1-' . (string)microtime(true);
+        $areaname2 = 'area2-' . (string)microtime(true);
+        $fakecontext = (object)array(
+            'id'            => 42,
+            'contextlevel'  => CONTEXT_MODULE,
+            'instanceid'    => 22,
+            'path'          => '/1/3/15/42',
+            'depth'         => 4);
+
+        // non-existing area
+        $gradingman = get_grading_manager($fakecontext, 'mod_foobar', $areaname1);
+        $this->assertNull($gradingman->get_active_method());
+
+        // creates area implicitly and sets active method
+        $this->assertTrue($gradingman->set_active_method('rubric'));
+        $this->assertEquals('rubric', $gradingman->get_active_method());
+
+        // repeat setting of already set active method
+        $this->assertFalse($gradingman->set_active_method('rubric'));
+
+        // switch the manager to another area
+        $gradingman->set_area($areaname2);
+        $this->assertNull($gradingman->get_active_method());
+
+        // switch back and ask again
+        $gradingman->set_area($areaname1);
+        $this->assertEquals('rubric', $gradingman->get_active_method());
+
+        // attempting to set an invalid method
+        $this->setExpectedException('moodle_exception');
+        $gradingman->set_active_method('no_one_should_ever_try_to_implement_a_method_with_this_silly_name');
+    }
+
+    public function test_tokenize() {
+
+        $UTFfailuremessage = 'A test using UTF-8 characters has failed. Consider updating PHP and PHP\'s PCRE or INTL extensions (MDL-30494)';
+
+        $needle = "    šašek, \n\n   \r    a král;  \t";
+        $tokens = testable_grading_manager::tokenize($needle);
+        $this->assertEquals(2, count($tokens), $UTFfailuremessage);
+        $this->assertTrue(in_array('šašek', $tokens), $UTFfailuremessage);
+        $this->assertTrue(in_array('král', $tokens), $UTFfailuremessage);
+
+        $needle = ' "   šašek a král "    ';
+        $tokens = testable_grading_manager::tokenize($needle);
+        $this->assertEquals(1, count($tokens));
+        $this->assertTrue(in_array('šašek a král', $tokens));
+
+        $needle = '""';
+        $tokens = testable_grading_manager::tokenize($needle);
+        $this->assertTrue(empty($tokens));
+
+        $needle = '"0"';
+        $tokens = testable_grading_manager::tokenize($needle);
+        $this->assertEquals(1, count($tokens));
+        $this->assertTrue(in_array('0', $tokens));
+
+        $needle = '<span>Aha</span>, then who\'s a bad guy here he?';
+        $tokens = testable_grading_manager::tokenize($needle);
+        $this->assertEquals(8, count($tokens));
+        $this->assertTrue(in_array('span', $tokens)); // Extracted the tag name
+        $this->assertTrue(in_array('Aha', $tokens));
+        $this->assertTrue(in_array('who', $tokens)); // Removed the trailing 's
+        $this->assertTrue(!in_array('a', $tokens)); //Single letter token was dropped
+        $this->assertTrue(in_array('he', $tokens)); // Removed the trailing ?
+
+        $needle = 'grammar, "english language"';
+        $tokens = testable_grading_manager::tokenize($needle);
+        $this->assertTrue(in_array('grammar', $tokens));
+        $this->assertTrue(in_array('english', $tokens));
+        $this->assertTrue(in_array('language', $tokens));
+        $this->assertTrue(!in_array('english language', $tokens)); // Quoting part of the string is not supported
+    }
+}
diff --git a/grade/simpletest/testreportlib.php b/grade/simpletest/testreportlib.php
deleted file mode 100644
index dbfd982da4aed..0000000000000
--- a/grade/simpletest/testreportlib.php
+++ /dev/null
@@ -1,48 +0,0 @@
-<?php
-
-// This file is part of Moodle - http://moodle.org/
-//
-// Moodle is free software: you can redistribute it and/or modify
-// it under the terms of the GNU General Public License as published by
-// the Free Software Foundation, either version 3 of the License, or
-// (at your option) any later version.
-//
-// Moodle is distributed in the hope that it will be useful,
-// but WITHOUT ANY WARRANTY; without even the implied warranty of
-// MERCHANTABILITY or FITNESS FOR A PARTICULAR PURPOSE.  See the
-// GNU General Public License for more details.
-//
-// You should have received a copy of the GNU General Public License
-// along with Moodle.  If not, see <http://www.gnu.org/licenses/>.
-
-/**
- * Unit tests for grade/report/lib.php.
- *
- * @author nicolas@moodle.com
- * @license http://www.gnu.org/copyleft/gpl.html GNU Public License
- * @package moodlecore
- */
-
-
-if (!defined('MOODLE_INTERNAL')) {
-    die('Direct access to this script is forbidden.');    ///  It must be included from a Moodle page
-}
-
-require_once($CFG->dirroot.'/grade/report/lib.php');
-
-/**
- * @TODO create a set of mock objects to simulate the database operations. We don't want to connect to any real sql server.
- */
-class gradereportlib_test extends UnitTestCaseUsingDatabase {
-    var $courseid = 1;
-    var $context = null;
-    var $report = null;
-    public  static $includecoverage = array('grade/report/lib.php');
-
-    function setUp() {
-        //$this->report = new grade_report($this->courseid, $this->context);
-    }
-
-}
-
-
diff --git a/grade/tests/edittree_test.php b/grade/tests/edittree_test.php
new file mode 100644
index 0000000000000..7cac51651a8ef
--- /dev/null
+++ b/grade/tests/edittree_test.php
@@ -0,0 +1,52 @@
+<?php
+// This file is part of Moodle - http://moodle.org/
+//
+// Moodle is free software: you can redistribute it and/or modify
+// it under the terms of the GNU General Public License as published by
+// the Free Software Foundation, either version 3 of the License, or
+// (at your option) any later version.
+//
+// Moodle is distributed in the hope that it will be useful,
+// but WITHOUT ANY WARRANTY; without even the implied warranty of
+// MERCHANTABILITY or FITNESS FOR A PARTICULAR PURPOSE.  See the
+// GNU General Public License for more details.
+//
+// You should have received a copy of the GNU General Public License
+// along with Moodle.  If not, see <http://www.gnu.org/licenses/>.
+
+/**
+ * Unit tests for grade/edit/tree/lib.php.
+ *
+ * @pacakge  core_grade
+ * @category phpunit
+ * @author   Andrew Davis
+ * @license  http://www.gnu.org/copyleft/gpl.html GNU Public License
+ */
+
+defined('MOODLE_INTERNAL') || die();
+
+global $CFG;
+require_once($CFG->dirroot.'/grade/edit/tree/lib.php');
+
+
+/**
+ * Tests grade_edit_tree (deals with the data on the categories and items page in the gradebook)
+ */
+class gradeedittreelib_testcase extends basic_testcase {
+    var $courseid = 1;
+    var $context = null;
+    var $grade_edit_tree = null;
+
+    public function test_format_number() {
+        $numinput = array( 0,   1,   1.01, '1.010', 1.2345);
+        $numoutput = array(0.0, 1.0, 1.01,  1.01,   1.2345);
+
+        for ($i=0; $i<sizeof($numinput); $i++) {
+            $msg = 'format_number() testing '.$numinput[$i].' %s';
+            $this->assertEquals(grade_edit_tree::format_number($numinput[$i]),$numoutput[$i],$msg);
+        }
+    }
+
+}
+
+
diff --git a/phpunit.xml.dist b/phpunit.xml.dist
index 36011c9ede8dc..f0d8f70db2922 100644
--- a/phpunit.xml.dist
+++ b/phpunit.xml.dist
@@ -38,6 +38,10 @@
         <testsuite name="core_course">
             <directory suffix="_test.php">course/tests</directory>
         </testsuite>
+        <testsuite name="core_grade">
+            <directory suffix="_test.php">grade/tests</directory>
+            <directory suffix="_test.php">grade/grading/tests</directory>
+        </testsuite>
 
         <!--Plugin suites: use admin/tool/phpunit/cli/util.php to build phpunit.xml from phpunit.xml.dist with up-to-date list of plugins in current install-->
 <!--@plugin_suites_start@-->