For my site: example.com I build subdomains de.example.com and es.example.com (within same name folders in the root).
So, the page example.com/test have this in meta:
<link rel="alternate" hreflang="en" href="http://example.com/test" />
<link rel="alternate" hreflang="de" href="http://de.example.com/testen" />
<link rel="alternate" hreflang="es" href="http://es.example.com/pruebas" />
In GWT (for main domain) under CrawlErrors/Not found I see:
URL:
http://example.com/de.example.com/testen linked from: http://example.com/test.
...and so on for almost every link used with link rel="alternate".
It seems that Google completely misunderstood link rel="alternate" even it is built by his rules...or I did something wrong.