Nested Application from the Local File System build does not work properly

Issue reported aws/aws-sam-cli#1470

Issue description

According the documentation https://docs.aws.amazon.com/serverless-application-model/latest/developerguide/serverless-sam-template-nested-applications.html

The AWS::Serverless::Application can point to another template file (check Defining a Nested Application from the Local File System)

if you trigger the commands sam build; sam package, sam deploy the result of the nested application is a broken zip file.

Scenario

/ - javaproject
  | - template.yaml
  | - pom.xml
  | - src/main/java...
/ - template.yaml  (parent)

Parent template references javaproject/template.yaml as AWS::Serverless::Application`

Resources:
  AvatarApplication:
    Type: AWS::Serverless::Application
    Properties:
      Location: javaproject/template.yaml

The sequence sam build; sam package; sam deploy when triggered from parent directory completes. But the zipfile for the function under the nested application is wrongly built.

Let's check step by step using the sample code https://github.com/lucasam/sambuildissue2

Cloning sample code

git clone https://github.com/lucasam/sambuildissue2
cd sambuildissue2

sam build

lucasam$ .sam build --debug 
Using SAM Template at /Users/lucasam/Documents/src/sambuildissue2/template.yaml
Telemetry endpoint configured to be https://aws-serverless-tools-telemetry.us-west-2.amazonaws.com/metrics
'build' command is called
No Parameters detected in the template
1 resources found in the template

Build Succeeded

Built Artifacts  : .aws-sam/build
Built Template   : .aws-sam/build/template.yaml

Commands you can use next
=========================
[*] Invoke Function: sam local invoke
[*] Package: sam package --s3-bucket <yourbucket>
    
Sending Telemetry: {'metrics': [{'commandRun': {'awsProfileProvided': False, 'debugFlagProvided': True, 'region': '', 'commandName': 'sam build', 'duration': 21, 'exitReason': 'success', 'exitCode': 0, 'requestId': '7178268e-8384-4ad2-a044-cfd938769ca7', 'installationId': '893c5aa8-d107-4b3b-8f82-e7cb5c9ce2fe', 'sessionId': '907647c9-698e-428a-a1ca-d86ca056821e', 'executionEnvironment': 'CLI', 'pyversion': '3.7.4', 'samcliVersion': '0.22.0'}}]}
HTTPSConnectionPool(host='aws-serverless-tools-telemetry.us-west-2.amazonaws.com', port=443): Read timed out. (read timeout=0.1)

sam package

lucasam$ sam package --output-template-file packaged.yaml  --s3-bucket $BUCKET 
Uploading to 41c665fe10f20b0417eb7f684d7a8072.template  791 / 791.0  (100.00%)
Successfully packaged artifacts and wrote output template to file packaged.yaml.
Execute the following command to deploy the packaged template
aws cloudformation deploy --template-file /Users/lucasam/Documents/src/sambuildissue2/packaged.yaml --stack-name <YOUR STACK NAME>

sam deploy

lucasam$ sam deploy  --template-file packaged.yaml  --stack-name sam-bug  --capabilities CAPABILITY_IAM CAPABILITY_AUTO_EXPAND \
    --region us-east-1
Waiting for changeset to be created..
Waiting for stack create/update to complete
Successfully created/updated stack - sam-bug

Everything looks fine so far. BUT

If you inspect the nested application you will find

f01898820a1c:x2 lucasam$ aws s3 cp s3://<BUCKET>/261b18ebec06a0f13ad2709228e60cca . 
download: s3://<BUCKET>/261b18ebec06a0f13ad2709228e60cca to ./261b18ebec06a0f13ad2709228e60cca
f01898820a1c:x2 lucasam$ unzip 261b18ebec06a0f13ad2709228e60cca
Archive:  261b18ebec06a0f13ad2709228e60cca
  inflating: template.yaml           
  inflating: sam-issue2.iml          
  inflating: pom.xml                 
  inflating: Readme.md               
  inflating: License.txt             
  inflating: src/main/java/com/test/FunctionOne.java  

Issue

• Observe that the zip file representing the nested application is just a zip of the Nested application folder.
• Expected. SAM should interpret template.yaml of the nested application and build it properly.

Workaround

• Build use sam build and sam package at the nested application. Then point at parent template the packaged.yaml instead of template.yaml