Water damage to wall drywall near ceiling - Should I repair or extract and replace?
I think this might be more of an opinion type question but I would just repair the corner and fill the small section where the paper ripped off.
Fill it put a layer of tape let it dry, put a new corner in mud let dry sand and a can of texture should fix it up. If messy with the mud it may take more sanding.
If you cut a section out there will be more repair work if the damaged area was wider and deeper I would cut out but it looks like the back paper is intact.
1 maybe 2 coats of mud should do it from what I see.