Children with balloon hats sit on the grass.
Children are watching the clowns entertain them.
The children have balloon hats and are sitting on the grass but that doesn't necessarily imply that they are watching clowns entertain them.
exists e1 x1 x2 x3 x4.(n_grass(x4) & on(e1,x4) & Actor(e1,x1) & v_sit(e1) & with(x1,x2) & n_hat(x2) & of(x2,x3) & n_balloon(x3) & n_child(x1))
exists e1 e2 x1 x2 x3.(n_thing(x2) & n_clown(x2) & Theme(e2,x2) & Actor(e2,x1) & v_watch(e2) & Theme(e1,x2) & Actor(e1,x3) & v_entertain(e1) & (x2 = x3) & n_child(x1))