diff --git a/erpnext/buying/doctype/purchase_order/purchase_order.py b/erpnext/buying/doctype/purchase_order/purchase_order.py
index 4da1e76c2dc..3576cd426d6 100644
--- a/erpnext/buying/doctype/purchase_order/purchase_order.py
+++ b/erpnext/buying/doctype/purchase_order/purchase_order.py
@@ -49,18 +49,6 @@ class PurchaseOrder(BuyingController):
 			}
 		]
 
-	def can_update_items(self) -> bool:
-		result = True
-
-		if self.is_subcontracted and not self.is_old_subcontracting_flow:
-			# Check - 1: NOT ALLOWED if non-cancelled Subcontracting Order exists for this Purchase Order
-			if frappe.db.exists(
-				"Subcontracting Order", {"purchase_order": self.name, "docstatus": ["!=", 2]}
-			):
-				return False
-
-		return result
-
 	def onload(self):
 		supplier_tds = frappe.db.get_value("Supplier", self.supplier, "tax_withholding_category")
 		self.set_onload("supplier_tds", supplier_tds)
@@ -463,6 +451,17 @@ class PurchaseOrder(BuyingController):
 		else:
 			self.db_set("per_received", 0, update_modified=False)
 
+	def can_update_items(self) -> bool:
+		result = True
+
+		if self.is_subcontracted and not self.is_old_subcontracting_flow:
+			if frappe.db.exists(
+				"Subcontracting Order", {"purchase_order": self.name, "docstatus": ["!=", 2]}
+			):
+				result = False
+
+		return result
+
 
 def item_last_purchase_rate(name, conversion_rate, item_code, conversion_factor=1.0):
 	"""get last purchase rate for an item"""
diff --git a/erpnext/controllers/accounts_controller.py b/erpnext/controllers/accounts_controller.py
index 340ec01bee7..081abe12104 100644
--- a/erpnext/controllers/accounts_controller.py
+++ b/erpnext/controllers/accounts_controller.py
@@ -2855,6 +2855,27 @@ def update_child_qty_rate(parent_doctype, trans_items, parent_doctype_name, chil
 
 		return update_supplied_items
 
+	def validate_fg_item_for_subcontracting(new_data, is_new):
+		if is_new:
+			if not new_data.get("fg_item"):
+				frappe.throw(
+					_("Finished Good Item is not specified for service item {0}").format(new_data["item_code"])
+				)
+			else:
+				is_sub_contracted_item, default_bom = frappe.db.get_value(
+					"Item", new_data["fg_item"], ["is_sub_contracted_item", "default_bom"]
+				)
+
+				if not is_sub_contracted_item:
+					frappe.throw(
+						_("Finished Good Item {0} must be a sub-contracted item").format(new_data["fg_item"])
+					)
+				elif not default_bom:
+					frappe.throw(_("Default BOM not found for FG Item {0}").format(new_data["fg_item"]))
+
+		if not new_data.get("fg_item_qty"):
+			frappe.throw(_("Finished Good Item {0} Qty can not be zero").format(new_data["fg_item"]))
+
 	data = json.loads(trans_items)
 
 	any_qty_changed = False  # updated to true if any item's qty changes
@@ -2886,6 +2907,7 @@ def update_child_qty_rate(parent_doctype, trans_items, parent_doctype_name, chil
 
 			prev_rate, new_rate = flt(child_item.get("rate")), flt(d.get("rate"))
 			prev_qty, new_qty = flt(child_item.get("qty")), flt(d.get("qty"))
+			prev_fg_qty, new_fg_qty = flt(child_item.get("fg_item_qty")), flt(d.get("fg_item_qty"))
 			prev_con_fac, new_con_fac = flt(child_item.get("conversion_factor")), flt(
 				d.get("conversion_factor")
 			)
@@ -2898,6 +2920,7 @@ def update_child_qty_rate(parent_doctype, trans_items, parent_doctype_name, chil
 
 			rate_unchanged = prev_rate == new_rate
 			qty_unchanged = prev_qty == new_qty
+			fg_qty_unchanged = prev_fg_qty == new_fg_qty
 			uom_unchanged = prev_uom == new_uom
 			conversion_factor_unchanged = prev_con_fac == new_con_fac
 			any_conversion_factor_changed |= not conversion_factor_unchanged
@@ -2907,6 +2930,7 @@ def update_child_qty_rate(parent_doctype, trans_items, parent_doctype_name, chil
 			if (
 				rate_unchanged
 				and qty_unchanged
+				and fg_qty_unchanged
 				and conversion_factor_unchanged
 				and uom_unchanged
 				and date_unchanged
@@ -2917,6 +2941,17 @@ def update_child_qty_rate(parent_doctype, trans_items, parent_doctype_name, chil
 		if flt(child_item.get("qty")) != flt(d.get("qty")):
 			any_qty_changed = True
 
+		if (
+			parent.doctype == "Purchase Order"
+			and parent.is_subcontracted
+			and not parent.is_old_subcontracting_flow
+		):
+			validate_fg_item_for_subcontracting(d, new_child_flag)
+			child_item.fg_item_qty = flt(d["fg_item_qty"])
+
+			if new_child_flag:
+				child_item.fg_item = d["fg_item"]
+
 		child_item.qty = flt(d.get("qty"))
 		rate_precision = child_item.precision("rate") or 2
 		conv_fac_precision = child_item.precision("conversion_factor") or 2
diff --git a/erpnext/public/js/utils.js b/erpnext/public/js/utils.js
index 9116fd1f036..c11d123982f 100755
--- a/erpnext/public/js/utils.js
+++ b/erpnext/public/js/utils.js
@@ -579,7 +579,9 @@ erpnext.utils.update_child_items = function(opts) {
 			"conversion_factor": d.conversion_factor,
 			"qty": d.qty,
 			"rate": d.rate,
-			"uom": d.uom
+			"uom": d.uom,
+			"fg_item": d.fg_item,
+			"fg_item_qty": d.fg_item_qty,
 		}
 	});