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My dataframe coordinate system is in UTM with linear unit Meter.

If I have a Polygon shapefile in a UTM coordinate system with a linear unit of Foot_US and I am sent a shapefile in the same UTM coordinate system with a linear unit of Meter. I reluctantly copy/paste the linear unit Meter feature into the linear unit Foot_US shapefile and the vertices' xy are identical in both the linear unit Foot_US and Meter.

What am I missing. I would have figured they would be different. Thanks.

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If you are using ArcMap it takes the coordinate system of the first added shapefile as the data frame's coordinate system. So the second added shapefile will be reprojected on the fly to the first added shapefile's coordinate system. That is why the vertices' xy are identical. –  ustroetz May 30 '13 at 16:32
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Are you looking at the coordinate system's linear unit, or the data frame's display units?

If you can calculate geometry in an attribute, you would be sure of the coordinate system and units used.

(I am guessing that the polygon appears in the same location with reference to a third (geo-referenced) dataset.)

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