The father merged/transfused the family dog and his daughter (about 4/6 years old and a good friend to the main character) to make a talking chimera, because the council was pressing his ass for scientific results to make one, such as he had done several years ago (where he, unbeknownst to them, merged his wife with something). So the Fullmetal Alchemist (Edward) walks in to see this creature, and is glad for his friend to have been successful. But after it speaks "Ed...-ward/Brother?" he realises the girl and dog is nowhere to be seen, and this is what is left of them. This abomination is suffering to both the dog and girl, so he has to kill them.
Here is a clip of the scene https://m.youtube.com/watch?v=IdTzcp1YLY8
Here is a clip of the scene https://m.youtube.com/watch?v=IdTzcp1YLY8
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