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Sometimes when you are using the Free Transform mode, you can't see the handles around the given layer that you are trying to transform. Let me give you an example here. I'm going to turn off small layer here, turn on the big layer, and it turns out this layer is much larger than the actual document. That can happen when you are moving higher resolution images into smaller resolution images and when your image comes in, it's a lot larger. It's probably being clipped by the actual canvas here, parts of the image you can't see like in this situation. So I'm going to do Command+T, Ctrl+T and this is what I'm talking about. I can only see one corner handle here. To get your document so you can see all the transformation handles, you are just going to use the Fit to Window command and that's Command+0 or Ctrl+0 and that will scale the image down in your view small enough so that you can see all your transformation handles.
Now, because I'm in the Full Screen Mode, the handles are partly going behind my panel. So I'll just hold down the Spacebar to get my Hand tool and then I can pan the image around and there I can see the full size of my layer, this big layer here and I can see all the transformation handles. Now I can hold down the Shift key and scale from that other corner and keep in mind while you are in the Free Transform mode, if you want to reposition, you can just click in the middle of the bounding box to reposition it. So you can scale and move at the same time and I'll just going to eyeball that and when I like it, I can do Command+0 again to make it Fit to Window in this new size. Once I got the size I want, hit Return or Enter and I have got my transformation completed to fit within this new target sized document.
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