[Past exam – Jun 2017 – 1a.5] Please help me this case

Please help me resolve the case below, as Financial asset (bond) should be derecognised or not?

On 1 April 2015, Diamond acquired $50 million of 6% listed bonds at their nominal value. Diamond may sell or hold bonds to maturity and so, based on this business model, has designated the bonds as fair value through other comprehensive income. The effective rate of interest on the bonds is also 6%. The bonds had a fair value of $42 million at 31 March 2016 and were correctly treated in the financial statements of that year.
On 31 March 2017, Diamond received the coupon interest of $3 million, which was recorded within interest received, and then sold the bonds on the same day for $35 million. The disposal proceeds were substantially below the fair value of the bonds which was $38 million at 31 March 2017. A $7 million loss on disposal was charged against profits. Diamond has an option to repurchase the bonds at any time up to 31 December 2018 for $36 million. The fair value is expected to increase in the future and it is highly likely that Diamond will exercise this option.