classical mechanics - Thermal energy generated due to loss in kinetic energy when observed from two different frames of reference

A body is moving with a velocity $v$ with respect to a frame of reference $S_1$.

It bumps into a very heavy object and comes to rest instantaneously, its kinetic energy

$$\frac{1}{2}mv^2$$

as seen from the frame $S_1$ is completely converted to thermal energy.

Now, a man moving with a uniform velocity $V$ (in the direction of the body) with respect to $S_1$ observes the body. He notes that its initial kinetic energy of the body is

$$\frac{1}{2}m(v+V)^2,$$

and that after it rams into the heavy body as

$$\frac{1}{2}mV^2,$$

and concludes that the thermal energy produced is the difference

$$\frac{1}{2}m(v+V)^2-\frac{1}{2}mV^2~=~\frac{1}{2} mv^2+mvV.$$

Which of the two answers is correct and why?