--- a/taxonomy_menu.module	2012-03-19 07:07:50.000000000 +0100
+++ b/taxonomy_menu.module	2015-05-08 16:48:08.000000000 +0200
@@ -775,17 +775,26 @@
  * @param $vid
  * @return boolean
  */
-function _taxonomy_menu_children_has_nodes($tid, $vid, $has_nodes = FALSE) {
-  if (!$has_nodes) {
-    $children = taxonomy_get_children($tid, $vid);
-    foreach ($children as $tid => $term) {
-      if (_taxonomy_menu_term_count($tid) > 0) {
-        return _taxonomy_menu_children_has_nodes($tid, $vid, TRUE);
-      }
+function _taxonomy_menu_children_has_nodes($tid, $vid) {
+  $children = taxonomy_get_children($tid, $vid);
+
+  // Try to find nodes in child terms.
+  foreach ($children as $tid => $term) {
+    if (_taxonomy_menu_term_count($tid) > 0) {
+      return TRUE;
     }
   }
-  return $has_nodes;
+
+  // All children have no nodes. Check their descendents.
+  foreach ($children as $tid => $term) {
+    if (_taxonomy_menu_children_has_nodes($tid, $vid)) {
+      return TRUE;
+     }
+  }
+
+  return FALSE;
 }
+
 /**
  * Helper function for insert and update hooks
  */
@@ -793,7 +802,12 @@
   // if tid is 0 then do not chagne any settings
   if ($item['tid'] > 0) {
     // get the number of node attached to this term
-    $num = _taxonomy_menu_term_count($item['tid']);
+    if (variable_get('taxonomy_menu_display_descendants_'. $item['vid'], FALSE)) {
+      $num = taxonomy_term_count_nodes($item['tid']);
+    }
+    else {
+      $num = _taxonomy_menu_term_count($item['tid']);
+    }
 
     // if hide menu is selected and the term count is 0 and the term has no children then do not create the menu item
     if ($num == 0 &&