1) If the upper piece extended into the next (lower) room, you could do an "outside (vertical) 45 on it.
2) A new piece would run horizontal and would have a (vertical) 45 on the left mating with the existing molding of the upper room. On its right would be a diagonal 45.
3) Another new piece would run vertical and have a diagonal 45 on its top to mate with the previous piece. It would have another diagonal 45 to meet the existing horizontal in the lower room.
A simple 1x running vertical and against which the lower molding would butt. The upper would just have a return (a small 45 running only the distance (as wide as) the thickness of the molding to cover the endgrain of the molding.
This 1x method could have flutes, cove routered edges, medallions, or whatever fit your design scheme.