diff --git a/services/surfaceflinger/Layer.cpp b/services/surfaceflinger/Layer.cpp
index 4add863..d28a484 100644
--- a/services/surfaceflinger/Layer.cpp
+++ b/services/surfaceflinger/Layer.cpp
@@ -277,14 +277,12 @@
     return reduce(mBounds, activeTransparentRegion);
 }
 
-ui::Transform Layer::getTransformWithScale() const {
+ui::Transform Layer::getBufferScaleTransform() const {
     // If the layer is not using NATIVE_WINDOW_SCALING_MODE_FREEZE (e.g.
     // it isFixedSize) then there may be additional scaling not accounted
-    // for in the transform. We need to mirror this scaling to child surfaces
-    // or we will break the contract where WM can treat child surfaces as
-    // pixels in the parent surface.
+    // for in the layer transform.
     if (!isFixedSize() || !mActiveBuffer) {
-        return mEffectiveTransform;
+        return {};
     }
 
     // If the layer is a buffer state layer, the active width and height
@@ -292,24 +290,40 @@
     const uint32_t activeWidth = getActiveWidth(getDrawingState());
     const uint32_t activeHeight = getActiveHeight(getDrawingState());
     if (activeWidth >= UINT32_MAX && activeHeight >= UINT32_MAX) {
-        return mEffectiveTransform;
+        return {};
     }
 
-    int bufferWidth;
-    int bufferHeight;
-    if ((mCurrentTransform & NATIVE_WINDOW_TRANSFORM_ROT_90) == 0) {
-        bufferWidth = mActiveBuffer->getWidth();
-        bufferHeight = mActiveBuffer->getHeight();
-    } else {
-        bufferHeight = mActiveBuffer->getWidth();
-        bufferWidth = mActiveBuffer->getHeight();
+    int bufferWidth = mActiveBuffer->getWidth();
+    int bufferHeight = mActiveBuffer->getHeight();
+
+    if (mCurrentTransform & NATIVE_WINDOW_TRANSFORM_ROT_90) {
+        std::swap(bufferWidth, bufferHeight);
     }
+
     float sx = activeWidth / static_cast<float>(bufferWidth);
     float sy = activeHeight / static_cast<float>(bufferHeight);
 
     ui::Transform extraParentScaling;
     extraParentScaling.set(sx, 0, 0, sy);
-    return mEffectiveTransform * extraParentScaling;
+    return extraParentScaling;
+}
+
+ui::Transform Layer::getTransformWithScale(const ui::Transform& bufferScaleTransform) const {
+    // We need to mirror this scaling to child surfaces or we will break the contract where WM can
+    // treat child surfaces as pixels in the parent surface.
+    if (!isFixedSize() || !mActiveBuffer) {
+        return mEffectiveTransform;
+    }
+    return mEffectiveTransform * bufferScaleTransform;
+}
+
+FloatRect Layer::getBoundsPreScaling(const ui::Transform& bufferScaleTransform) const {
+    // We need the pre scaled layer bounds when computing child bounds to make sure the child is
+    // cropped to its parent layer after any buffer transform scaling is applied.
+    if (!isFixedSize() || !mActiveBuffer) {
+        return mBounds;
+    }
+    return bufferScaleTransform.inverse().transform(mBounds);
 }
 
 void Layer::computeBounds(FloatRect parentBounds, ui::Transform parentTransform) {
@@ -321,7 +335,7 @@
     // Transform parent bounds to layer space
     parentBounds = getActiveTransform(s).inverse().transform(parentBounds);
 
-    // Calculate display frame
+    // Calculate source bounds
     mSourceBounds = computeSourceBounds(parentBounds);
 
     // Calculate bounds by croping diplay frame with layer crop and parent bounds
@@ -334,13 +348,15 @@
 
     mBounds = bounds;
     mScreenBounds = mEffectiveTransform.transform(mBounds);
+
+    // Add any buffer scaling to the layer's children.
+    ui::Transform bufferScaleTransform = getBufferScaleTransform();
     for (const sp<Layer>& child : mDrawingChildren) {
-        child->computeBounds(mBounds, getTransformWithScale());
+        child->computeBounds(getBoundsPreScaling(bufferScaleTransform),
+                             getTransformWithScale(bufferScaleTransform));
     }
 }
 
-
-
 Rect Layer::getCroppedBufferSize(const State& s) const {
     Rect size = getBufferSize(s);
     Rect crop = getCrop(s);
@@ -1666,7 +1682,9 @@
 void Layer::setChildrenDrawingParent(const sp<Layer>& newParent) {
     for (const sp<Layer>& child : mDrawingChildren) {
         child->mDrawingParent = newParent;
-        child->computeBounds(newParent->mBounds, newParent->getTransformWithScale());
+        child->computeBounds(newParent->mBounds,
+                             newParent->getTransformWithScale(
+                                     newParent->getBufferScaleTransform()));
     }
 }
 
diff --git a/services/surfaceflinger/Layer.h b/services/surfaceflinger/Layer.h
index 7f802e9..f333d0a 100644
--- a/services/surfaceflinger/Layer.h
+++ b/services/surfaceflinger/Layer.h
@@ -359,9 +359,15 @@
     // Compute bounds for the layer and cache the results.
     void computeBounds(FloatRect parentBounds, ui::Transform parentTransform);
 
+    // Returns the buffer scale transform if a scaling mode is set.
+    ui::Transform getBufferScaleTransform() const;
+
     // Get effective layer transform, taking into account all its parent transform with any
     // scaling if the parent scaling more is not NATIVE_WINDOW_SCALING_MODE_FREEZE.
-    ui::Transform getTransformWithScale() const;
+    ui::Transform getTransformWithScale(const ui::Transform& bufferScaleTransform) const;
+
+    // Returns the bounds of the layer without any buffer scaling.
+    FloatRect getBoundsPreScaling(const ui::Transform& bufferScaleTransform) const;
 
     int32_t getSequence() const { return sequence; }
 
diff --git a/services/surfaceflinger/tests/Transaction_test.cpp b/services/surfaceflinger/tests/Transaction_test.cpp
index bc5642e..d62afa5 100644
--- a/services/surfaceflinger/tests/Transaction_test.cpp
+++ b/services/surfaceflinger/tests/Transaction_test.cpp
@@ -4307,7 +4307,7 @@
 protected:
     void SetUp() override {
         LayerUpdateTest::SetUp();
-        mChild = createSurface(mClient, "Child surface", 10, 10, PIXEL_FORMAT_RGBA_8888, 0,
+        mChild = createSurface(mClient, "Child surface", 10, 15, PIXEL_FORMAT_RGBA_8888, 0,
                                mFGSurfaceControl.get());
         fillSurfaceRGBA8(mChild, 200, 200, 200);
 
@@ -4413,6 +4413,32 @@
     }
 }
 
+// A child with a scale transform should be cropped by its parent bounds.
+TEST_F(ChildLayerTest, ChildLayerScalingCroppedByParent) {
+    asTransaction([&](Transaction& t) {
+        t.setPosition(mFGSurfaceControl, 0, 0);
+        t.setPosition(mChild, 0, 0);
+    });
+
+    // Find the boundary between the parent and child.
+    {
+        mCapture = screenshot();
+        mCapture->expectChildColor(0, 0);
+        mCapture->expectChildColor(9, 9);
+        mCapture->expectFGColor(10, 10);
+    }
+
+    asTransaction([&](Transaction& t) { t.setMatrix(mChild, 10.0, 0, 0, 10.0); });
+
+    // The child should fill its parent bounds and be cropped by it.
+    {
+        mCapture = screenshot();
+        mCapture->expectChildColor(0, 0);
+        mCapture->expectChildColor(63, 63);
+        mCapture->expectBGColor(64, 64);
+    }
+}
+
 TEST_F(ChildLayerTest, ChildLayerAlpha) {
     fillSurfaceRGBA8(mBGSurfaceControl, 0, 0, 254);
     fillSurfaceRGBA8(mFGSurfaceControl, 254, 0, 0);
@@ -4649,8 +4675,8 @@
         mCapture = screenshot();
         // We've positioned the child in the top left.
         mCapture->expectChildColor(0, 0);
-        // But it's only 10x10.
-        mCapture->expectFGColor(10, 10);
+        // But it's only 10x15.
+        mCapture->expectFGColor(10, 15);
     }
 
     asTransaction([&](Transaction& t) {
@@ -4664,9 +4690,9 @@
         // We've positioned the child in the top left.
         mCapture->expectChildColor(0, 0);
         mCapture->expectChildColor(10, 10);
-        mCapture->expectChildColor(19, 19);
-        // And now it should be scaled all the way to 20x20
-        mCapture->expectFGColor(20, 20);
+        mCapture->expectChildColor(19, 29);
+        // And now it should be scaled all the way to 20x30
+        mCapture->expectFGColor(20, 30);
     }
 }
 
@@ -4682,8 +4708,9 @@
         mCapture = screenshot();
         // We've positioned the child in the top left.
         mCapture->expectChildColor(0, 0);
-        // But it's only 10x10.
-        mCapture->expectFGColor(10, 10);
+        mCapture->expectChildColor(9, 14);
+        // But it's only 10x15.
+        mCapture->expectFGColor(10, 15);
     }
     // We set things up as in b/37673612 so that there is a mismatch between the buffer size and
     // the WM specified state size.
@@ -4704,6 +4731,115 @@
     }
 }
 
+// A child with a buffer transform from its parents should be cropped by its parent bounds.
+TEST_F(ChildLayerTest, ChildCroppedByParentWithBufferTransform) {
+    asTransaction([&](Transaction& t) {
+        t.show(mChild);
+        t.setPosition(mChild, 0, 0);
+        t.setPosition(mFGSurfaceControl, 0, 0);
+        t.setSize(mChild, 100, 100);
+    });
+    fillSurfaceRGBA8(mChild, 200, 200, 200);
+
+    {
+        mCapture = screenshot();
+
+        mCapture->expectChildColor(0, 0);
+        mCapture->expectChildColor(63, 63);
+        mCapture->expectBGColor(64, 64);
+    }
+
+    asTransaction([&](Transaction& t) { t.setSize(mFGSurfaceControl, 128, 64); });
+    sp<Surface> s = mFGSurfaceControl->getSurface();
+    auto anw = static_cast<ANativeWindow*>(s.get());
+    // Apply a 90 transform on the buffer.
+    native_window_set_buffers_transform(anw, NATIVE_WINDOW_TRANSFORM_ROT_90);
+    native_window_set_buffers_dimensions(anw, 64, 128);
+    fillSurfaceRGBA8(mFGSurfaceControl, 195, 63, 63);
+    waitForPostedBuffers();
+
+    // The child should be cropped by the new parent bounds.
+    {
+        mCapture = screenshot();
+        mCapture->expectChildColor(0, 0);
+        mCapture->expectChildColor(99, 63);
+        mCapture->expectFGColor(100, 63);
+        mCapture->expectBGColor(128, 64);
+    }
+}
+
+// A child with a scale transform from its parents should be cropped by its parent bounds.
+TEST_F(ChildLayerTest, ChildCroppedByParentWithBufferScale) {
+    asTransaction([&](Transaction& t) {
+        t.show(mChild);
+        t.setPosition(mChild, 0, 0);
+        t.setPosition(mFGSurfaceControl, 0, 0);
+        t.setSize(mChild, 200, 200);
+    });
+    fillSurfaceRGBA8(mChild, 200, 200, 200);
+
+    {
+        mCapture = screenshot();
+
+        mCapture->expectChildColor(0, 0);
+        mCapture->expectChildColor(63, 63);
+        mCapture->expectBGColor(64, 64);
+    }
+
+    asTransaction([&](Transaction& t) {
+        t.setOverrideScalingMode(mFGSurfaceControl, NATIVE_WINDOW_SCALING_MODE_SCALE_TO_WINDOW);
+        // Set a scaling by 2.
+        t.setSize(mFGSurfaceControl, 128, 128);
+    });
+
+    // Child should inherit its parents scale but should be cropped by its parent bounds.
+    {
+        mCapture = screenshot();
+        mCapture->expectChildColor(0, 0);
+        mCapture->expectChildColor(127, 127);
+        mCapture->expectBGColor(128, 128);
+    }
+}
+
+// Regression test for b/127368943
+// Child should ignore the buffer transform but apply parent scale transform.
+TEST_F(ChildLayerTest, ChildrenWithParentBufferTransformAndScale) {
+    asTransaction([&](Transaction& t) {
+        t.show(mChild);
+        t.setPosition(mChild, 0, 0);
+        t.setPosition(mFGSurfaceControl, 0, 0);
+    });
+
+    {
+        mCapture = screenshot();
+        mCapture->expectChildColor(0, 0);
+        mCapture->expectChildColor(9, 14);
+        mCapture->expectFGColor(10, 15);
+    }
+
+    // Change the size of the foreground to 128 * 64 so we can test rotation as well.
+    asTransaction([&](Transaction& t) {
+        t.setOverrideScalingMode(mFGSurfaceControl, NATIVE_WINDOW_SCALING_MODE_SCALE_TO_WINDOW);
+        t.setSize(mFGSurfaceControl, 128, 64);
+    });
+    sp<Surface> s = mFGSurfaceControl->getSurface();
+    auto anw = static_cast<ANativeWindow*>(s.get());
+    // Apply a 90 transform on the buffer and submit a buffer half the expected size so that we
+    // have an effective scale of 2.0 applied to the buffer along with a rotation transform.
+    native_window_set_buffers_transform(anw, NATIVE_WINDOW_TRANSFORM_ROT_90);
+    native_window_set_buffers_dimensions(anw, 32, 64);
+    fillSurfaceRGBA8(mFGSurfaceControl, 195, 63, 63);
+    waitForPostedBuffers();
+
+    // The child should ignore the buffer transform but apply the 2.0 scale from parent.
+    {
+        mCapture = screenshot();
+        mCapture->expectChildColor(0, 0);
+        mCapture->expectChildColor(19, 29);
+        mCapture->expectFGColor(20, 30);
+    }
+}
+
 TEST_F(ChildLayerTest, Bug36858924) {
     // Destroy the child layer
     mChild.clear();
@@ -4857,6 +4993,7 @@
         mCapture->checkPixel(10, 10, 255, 255, 255);
     }
 }
+
 class BoundlessLayerTest : public LayerUpdateTest {
 protected:
     std::unique_ptr<ScreenCapture> mCapture;