Preheat the oven to 350°F (175°C). Grease and line two 8-inch round cake pans with parchment paper.
In a bowl, whisk together flour, baking powder, and salt. Set aside.
In a large mixing bowl, beat butter and sugar until light and fluffy.
Add the eggs one at a time, mixing well after each addition.
Stir in vanilla extract and cotton candy flavoring.
Gradually add the dry ingredients, alternating with milk, mixing until the batter is smooth.
Divide the batter evenly into two bowls. Add pink food coloring to one bowl and blue food coloring to the other.
Pour each colored batter into the prepared cake pans.
Bake for 25–30 minutes, or until a toothpick inserted into the center comes out clean.
Allow cakes to cool in the pans for 10 minutes, then transfer to a wire rack to cool completely.
Prepare the Frosting
Beat butter and powdered sugar together until smooth.
Add vanilla extract and heavy cream, beating until light and fluffy.
Divide frosting and tint with pastel colors if desired.
Assemble the Cake
Place one cake layer on a serving plate and spread frosting evenly on top.
Add the second layer and frost the top and sides of the cake.
Decorate with fresh cotton candy just before serving for a whimsical finish.