Repair wall/ceiling under cornice

[mischmasch]

I just tore down some ceiling moldings in preparation for painting the walls in my apartment.
As you can see in the picture, it got a bit damaged underneath (the insulation is showing).
Concrete ceiling and gypsum wall.

How would you repair this? Gypsum plaster? Or is it enough to sand and fill with light filler?

I'm planning to paint white over the wallpaper afterwards, and not put up any new ceiling moldings.

Grateful for tips.

 

[GoForIt]

Sorry, but the solution is designed for a ceiling moulding to be there to cover the transition between materials.

A lot of work to do as you describe, and still a high risk that it won't look nice.