A company needs to expense interest of a bond at the market rate:
When a bond is sold at a discount ($775), it is because the market rate, (13%) is higher than the coupon rate (10%). As my company pays out interest at the discount rate, we expense the interest at the higher market rate. The extra expense gradually increases the book value of the bond to par value.
When a bond is sold at a premium ($1372), it is because the market rate is lower than our interest rate - so we can charge a higher rate. As we pay out interest at the coupon rate, we expense less than we pay so the value of the bond decreases until it reaches par value.