diff --git a/src/vs/workbench/api/common/extHostTerminalService.ts b/src/vs/workbench/api/common/extHostTerminalService.ts
index 1d9d7343e1e..94d494594cc 100644
--- a/src/vs/workbench/api/common/extHostTerminalService.ts
+++ b/src/vs/workbench/api/common/extHostTerminalService.ts
@@ -151,7 +151,7 @@ export class ExtHostTerminal {
 			isFeatureTerminal: withNullAsUndefined(internalOptions?.isFeatureTerminal),
 			isExtensionOwnedTerminal: true,
 			useShellEnvironment: withNullAsUndefined(internalOptions?.useShellEnvironment),
-			location: internalOptions?.location || this._serializeParentTerminal(options.location, internalOptions?.resolvedExtHostIdentifier, internalOptions?.location)
+			location: internalOptions?.location || this._serializeParentTerminal(options.location, internalOptions?.resolvedExtHostIdentifier)
 		});
 	}
 
@@ -174,12 +174,19 @@ export class ExtHostTerminal {
 		return this._id;
 	}
 
-	private _serializeParentTerminal(location?: TerminalLocation | vscode.TerminalEditorLocationOptions | vscode.TerminalSplitLocationOptions | { splitActiveTerminal: boolean }, parentTerminal?: ExtHostTerminalIdentifier, internalLocation?: TerminalLocation | { viewColumn: number, preserveState?: boolean } | { splitActiveTerminal: boolean }): TerminalLocation | vscode.TerminalEditorLocationOptions | { parentTerminal: ExtHostTerminalIdentifier } | { splitActiveTerminal: boolean } | vscode.TerminalEditorLocationOptions | undefined {
-		if (typeof location === 'object' && 'parentTerminal' in location) {
-			return parentTerminal ? { parentTerminal } : undefined;
-		} else if (internalLocation) {
-			location = internalLocation;
+	private _serializeParentTerminal(location?: TerminalLocation | vscode.TerminalEditorLocationOptions | vscode.TerminalSplitLocationOptions, parentTerminal?: ExtHostTerminalIdentifier): TerminalLocation | vscode.TerminalEditorLocationOptions | { parentTerminal: ExtHostTerminalIdentifier } | undefined {
+		if (typeof location === 'object') {
+			if ('parentTerminal' in location && location.parentTerminal && parentTerminal) {
+				return { parentTerminal };
+			}
+
+			if ('viewColumn' in location) {
+				return { viewColumn: location.viewColumn, preserveFocus: location.preserveFocus };
+			}
+
+			return undefined;
 		}
+
 		return location;
 	}
 
@@ -414,7 +421,7 @@ export abstract class BaseExtHostTerminalService extends Disposable implements I
 	public createExtensionTerminal(options: vscode.ExtensionTerminalOptions, internalOptions?: ITerminalInternalOptions): vscode.Terminal {
 		const terminal = new ExtHostTerminal(this._proxy, generateUuid(), options, options.name);
 		const p = new ExtHostPseudoterminal(options.pty);
-		terminal.createExtensionTerminal(this._resolveLocation(options.location), internalOptions?.resolvedExtHostIdentifier, asTerminalIcon(options.iconPath), asTerminalColor(options.color)).then(id => {
+		terminal.createExtensionTerminal(options.location, this._serializeParentTerminal(options, internalOptions).resolvedExtHostIdentifier, asTerminalIcon(options.iconPath), asTerminalColor(options.color)).then(id => {
 			const disposable = this._setupExtHostProcessListeners(id, p);
 			this._terminalProcessDisposables[id] = disposable;
 		});
@@ -422,17 +429,22 @@ export abstract class BaseExtHostTerminalService extends Disposable implements I
 		return terminal.value;
 	}
 
-	private _resolveLocation(location?: TerminalLocation | vscode.TerminalEditorLocationOptions | vscode.TerminalSplitLocationOptions): undefined | TerminalLocation | vscode.TerminalEditorLocationOptions {
-		if (typeof location === 'object' && 'viewColumn' in location && location.viewColumn !== undefined) {
-			return { viewColumn: location.viewColumn, preserveFocus: location.preserveFocus };
-		} else if (typeof location === 'object' && 'parentTerminal' in location) {
-			// parent terminal exthost ID is passed in internal options
-			// for conversion to TerminalInstance in mainThreadTerminalService
-			return undefined;
-		} else if (location === TerminalLocation.Editor || location === TerminalLocation.Panel) {
-			return location;
+	protected _serializeParentTerminal(options: vscode.TerminalOptions, internalOptions?: ITerminalInternalOptions): ITerminalInternalOptions {
+		internalOptions = internalOptions ? internalOptions : {};
+		if (options.location && typeof options.location === 'object' && 'parentTerminal' in options.location) {
+			const parentTerminal = options.location.parentTerminal;
+			if (parentTerminal) {
+				const parentExtHostTerminal = this._terminals.find(t => t.value === parentTerminal);
+				if (parentExtHostTerminal) {
+					internalOptions.resolvedExtHostIdentifier = parentExtHostTerminal._id;
+				}
+			}
+		} else if (options.location && typeof options.location !== 'object') {
+			internalOptions.location = options.location;
+		} else if (internalOptions.location && typeof internalOptions.location === 'object' && 'splitActiveTerminal' in internalOptions.location) {
+			internalOptions.location = { splitActiveTerminal: true };
 		}
-		return location;
+		return internalOptions;
 	}
 
 	public attachPtyToTerminal(id: number, pty: vscode.Pseudoterminal): void {
diff --git a/src/vs/workbench/api/node/extHostTerminalService.ts b/src/vs/workbench/api/node/extHostTerminalService.ts
index f772199a6df..3937478922b 100644
--- a/src/vs/workbench/api/node/extHostTerminalService.ts
+++ b/src/vs/workbench/api/node/extHostTerminalService.ts
@@ -26,22 +26,4 @@ export class ExtHostTerminalService extends BaseExtHostTerminalService {
 		terminal.create(options, this._serializeParentTerminal(options, internalOptions));
 		return terminal.value;
 	}
-
-	private _serializeParentTerminal(options: vscode.TerminalOptions, internalOptions?: ITerminalInternalOptions): ITerminalInternalOptions {
-		internalOptions = internalOptions ? internalOptions : {};
-		if (options.location && typeof options.location === 'object' && 'parentTerminal' in options.location) {
-			const parentTerminal = options.location.parentTerminal;
-			if (parentTerminal) {
-				const parentExtHostTerminal = this._terminals.find(t => t.value === parentTerminal);
-				if (parentExtHostTerminal) {
-					internalOptions.resolvedExtHostIdentifier = parentExtHostTerminal._id;
-				}
-			}
-		} else if (options.location && typeof options.location !== 'object') {
-			internalOptions.location = options.location;
-		} else if (internalOptions.location && typeof internalOptions.location === 'object' && 'splitActiveTerminal' in internalOptions.location) {
-			internalOptions.location = { splitActiveTerminal: true };
-		}
-		return internalOptions;
-	}
 }