Merging elements of two different pictures

Start by opening an image of a lake.

Insert an image with a family enjoying boat ride.

Scale down the image so it fits nicely with the background.
Click add vector mask button from the bottom of the layer palette.
Create selection of the unwanted area using polygon lasso tool.
Select black as foreground color and fill the selection by pressing Alt+Delete key.
Now we should do a bit of color correction. The family image cutout looks too saturated for our background. We'll reduce the saturation. Press Ctrl+U to open hue/saturation window. Apply settings as shown.

Duplicate the layer. Flip vertical and scale down vertically.
Reduce the opacity to 30%.