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1. Select the crop tool and drag it outwards to extend the canvas to the size of your "frame"
2. Use the rectangular marquee tool to select round the image then invert the selection using Shift+Ctrl+I so that the transparent area is selected
3. Go to Layer - New Fill Layer - Solid Colour and choose the colour of your matte
4. Right click the new fill layer and choose Blending Options then in the layer style tick Bevel & Emboss. Then click on the words Bevel and Emboss and set the light and size up as shown
Very Helpful. I deviated from your instructions only by first creating a larger canvas and then placing my image on it. The remaining steps worked perfectly. I do wish that the outside corner of the inner bevel was a sharp 90-degree instead of slightly rounded. Suggestion?
Make another new layer at the top of the stack.
Ctrl click the image layer to load it as a selection, and fill the new layer with any colour.
Give the new layer an inner Bevel & Emboss, and set the Fill to zero%
You'll need to turn off the current inner bevel — the one with the rounded corner, and I am not certain about the size of the new one, but you can Free Transform the layer to place it in the right position.
I like Trevor's idea to match the bevel with a sharp inner bevel using an extra layer. But rather than switching the lower bevel off, which made the outside edge flat, I made that layer a group and add a layer mask to mask off the inner edge. Then added the new inner edge as Trevor described, setting the direction to down where the other was up so that the shading was from the same side and surrounded the image with the same shade so that there was no transparency where I masked the inner bevel.
It would have been a lot easier if Bevel & Emboss matched the corner shapes
Both you and Trevor have been very helpful. I especially appreciate your illustrations of the action steps.