diff --git a/examples/Paperjs.org/InteractiveTiger.html b/examples/Paperjs.org/InteractiveTiger.html
index 170ccd90..f50ebeb5 100644
--- a/examples/Paperjs.org/InteractiveTiger.html
+++ b/examples/Paperjs.org/InteractiveTiger.html
@@ -11,7 +11,7 @@
         svg.visible = true; // Turn off display: none;
 
         // Resize the tiger to fit within the window:
-        project.activeLayer.fitBounds(view.bounds);
+        svg.fitBounds(view.bounds);
 
         var items = project.activeLayer.firstChild.children;
         var mouseIsDown = false;
diff --git a/examples/Paperjs.org/PathIntersections.html b/examples/Paperjs.org/PathIntersections.html
index 5d4dce6f..d322cc9f 100644
--- a/examples/Paperjs.org/PathIntersections.html
+++ b/examples/Paperjs.org/PathIntersections.html
@@ -6,22 +6,19 @@
     <link rel="stylesheet" href="../css/style.css">
     <script type="text/javascript" src="../../dist/paper-full.js"></script>
     <script type="text/paperscript" canvas="canvas">
+        // Imported SVG Groups have their applyMatrix flag turned off by
+        // default. This is required for SVG importing to work correctly. Turn
+        // it on now, so we don't have to deal with nested coordinate spaces.
         var words = project.importSVG(document.getElementById('svg'));
         words.visible = true; // Turn off the effect of display:none;
         words.fillColor = null;
         words.strokeColor = 'black';
-
         var yesGroup = words.children.yes;
-        var noGroup = words.children.no;
-        // Imported SVG Groups have their applyMatrix flag turned off by
-        // default. This is required for SVG importing to work correctly. Turn
-        // it on now, so we don't have to deal with nested coordinate spaces.
-        yesGroup.applyMatrix = true;
-        noGroup.applyMatrix = true;
 
+        var noGroup = words.children.no;
         // Resize the words to fit snugly inside the view:
-        project.activeLayer.fitBounds(view.bounds);
-        project.activeLayer.scale(0.8);
+        words.fitBounds(view.bounds);
+        words.scale(0.8);
 
         yesGroup.position = view.center;
         noGroup.position = [-900, -900];
diff --git a/src/basic/Matrix.js b/src/basic/Matrix.js
index 9c12c7d6..d9e1989e 100644
--- a/src/basic/Matrix.js
+++ b/src/basic/Matrix.js
@@ -102,7 +102,7 @@ var Matrix = Base.extend(/** @lends Matrix# */{
     _changed: function() {
         var owner = this._owner;
         if (owner) {
-            // If owner has #applyMatrix set, directly bake it in now.
+            // If owner has #applyMatrix set, directly bake the change in now.
             if (owner._applyMatrix) {
                 owner.transform(null, true);
             } else {
@@ -156,16 +156,17 @@ var Matrix = Base.extend(/** @lends Matrix# */{
     },
 
     /**
-     * Applies the matrix to the content of item that it belongs to, if
-     * possible, meaning it bakes it into the item's content or children.
+     * Attempts to apply the matrix to the content of item that it belongs to,
+     * meaning its transformation is baked into the item's content or children.
      * @param {Boolean} recursively controls whether to apply transformations
      * recursively on children
      * @return {Boolean} {@true if the matrix was applied}
      */
-    apply: function(recursively) {
+    apply: function(recursively, _setApplyMatrix) {
         var owner = this._owner;
         if (owner) {
-            owner.transform(null, true, Base.pick(recursively, true));
+            owner.transform(null, true, Base.pick(recursively, true),
+                    _setApplyMatrix);
             // If the matrix was successfully applied, it will be reset now.
             return this.isIdentity();
         }
diff --git a/src/item/Item.js b/src/item/Item.js
index be9e379c..470a5282 100644
--- a/src/item/Item.js
+++ b/src/item/Item.js
@@ -3021,11 +3021,12 @@ var Item = Base.extend(Emitter, /** @lends Item# */{
      *
      * @param {Matrix} matrix the matrix by which the item shall be transformed.
      */
-    // Remove this for now:
+    // TODO: Implement flags:
     // @param {String[]} flags Array of any of the following: 'objects',
     //        'children', 'fill-gradients', 'fill-patterns', 'stroke-patterns',
     //        'lines'. Default: ['objects', 'children']
-    transform: function(matrix, _applyMatrix, _applyRecursively) {
+    transform: function(matrix, _applyMatrix, _applyRecursively,
+            _setApplyMatrix) {
         // If no matrix is provided, or the matrix is the identity, we might
         // still have some work to do in case _applyMatrix is true
         if (matrix && matrix.isIdentity())
@@ -3048,8 +3049,8 @@ var Item = Base.extend(Emitter, /** @lends Item# */{
         // internal _matrix transformations to the item's content.
         // Application is not possible on Raster, PointText, PlacedSymbol, since
         // the matrix is where the actual transformation state is stored.
-        if (applyMatrix = applyMatrix
-                && this._transformContent(_matrix, _applyRecursively)) {
+        if (applyMatrix = applyMatrix && this._transformContent(_matrix,
+                    _applyRecursively, _setApplyMatrix)) {
             // When the _matrix could be applied, we also need to transform
             // color styles (only gradients so far) and pivot point:
             var pivot = this._pivot,
@@ -3067,6 +3068,9 @@ var Item = Base.extend(Emitter, /** @lends Item# */{
             // Reset the internal matrix to the identity transformation if it
             // was possible to apply it.
             _matrix.reset(true);
+            // Set the internal _applyMatrix flag to true if we're told to do so
+            if (_setApplyMatrix && this._canApplyMatrix)
+                this._applyMatrix = true;
         }
         // Calling _changed will clear _bounds and _position, but depending
         // on matrix we can calculate and set them again, so preserve them.
@@ -3105,11 +3109,12 @@ var Item = Base.extend(Emitter, /** @lends Item# */{
         return this;
     },
 
-    _transformContent: function(matrix, applyRecursively) {
+    _transformContent: function(matrix, applyRecursively, setApplyMatrix) {
         var children = this._children;
         if (children) {
             for (var i = 0, l = children.length; i < l; i++)
-                children[i].transform(matrix, true, applyRecursively);
+                children[i].transform(matrix, true, applyRecursively,
+                        setApplyMatrix);
             return true;
         }
     },
diff --git a/src/svg/SVGImport.js b/src/svg/SVGImport.js
index ee0b72f0..4c1f1894 100644
--- a/src/svg/SVGImport.js
+++ b/src/svg/SVGImport.js
@@ -587,13 +587,13 @@ new function() {
             item,
             data = node.getAttribute && node.getAttribute('data-paper-data'),
             settings = scope.settings,
-            prevApplyMatrix = settings.applyMatrix;
+            applyMatrix = settings.applyMatrix;
         // Have items imported from SVG not bake in all transformations to their
         // content and children, as this is how SVG works too, but preserve the
         // current setting so we can restore it after.
         settings.applyMatrix = false;
         item = importer && importer(node, type, options, isRoot) || null;
-        settings.applyMatrix = prevApplyMatrix;
+        settings.applyMatrix = applyMatrix;
         if (item) {
             // Do not apply attributes if this is a #document node.
             // See importGroup() for an explanation of filtering for Group:
@@ -612,8 +612,13 @@ new function() {
                 item._data = JSON.parse(data);
         }
         // Clear definitions at the end of import?
-        if (isRoot)
+        if (isRoot) {
             definitions = {};
+            // Now if settings.applyMatrix was set, apply recursively and set
+            // #applyMatrix = true on the item and all children.
+            if (applyMatrix && item)
+                item.matrix.apply(true, true);
+        }
         return item;
     }