The Lamb

Yesterday I bought Ashley a new stuffed animal. It was a lamb, very cute. I couldn't resist, it was on clearance with the Easter stuff and she liked it. So anyway, we got it and went home.
Later in the day Elizabeth was all excited about something. She came up to me and kept telling me something over and over. I finally figured out she was saying it was going to hatch. I asked her what. She then said the lamb. The sheep is having a lamb and it's going to hatch. She took me into her room to see. She had made it a bed in a box and the sheep was sleeping in it. She then lifted it up to reveal the egg. She said see, it's going to hatch. Then she opened it up and there was a little plastic sheep in it. I just had to laugh. I tried to tell her that sheep don't lay eggs. Where did we go wrong on this one?