"Did you over-exaggerate when you included yourself as part of the group that 'stuck a bottle up his a***'?" crown prosecutor Caroline Marco asked the 21-year-old.
"I did over-exaggerate it, yes," he said.
"And it's an over-exaggeration that I said 'funniest thing I've ever seen'".
"Initially I thought it was funny, but after seeing how serious this incident was ... he's my mate, I shouldn't have done that."
He said he believed the bottle did not actually penetrate the complainant's anus and said there was "no uproar" afterwards to suggest he had been injured.
Earlier, Hayes-Gordon described the dynamic among his friends as "prankish" and said they often teased each other.
Asked by Ms Marco if his social media messages were the true account and he'd changed his story after being charged, he said: "That's completely not true".
The prosecution alleges Jackson rolled the teenager over and restrained him by his feet, Watson took video footage on his phone and Hayes-Gordon - as the principal offender - inserted the bottle.
Watson and Jackson elected not to give evidence in the trial, which will hear submissions from the prosecution and defence later on Wednesday.
