Have you tried the Quirky Update? It's explained in the following article: http://www.sqlservercentral.com/articles/T-SQL/68467/

Be sure to understand it, follow the rules and test it correctly.

Here's an idea using your sample tables.

declare @tbl table

(LineNum int PRIMARY KEY CLUSTERED,

Code varchar(2),

Amt money,

MaxAmt money

)

insert into @tbl (LineNum, Code, Amt, MaxAmt)

values

(1,'AA',10.00,50.00),

(2,'AA',20.00,50.00),

(3,'AA',10.00,50.00),

(4,'AA',40.00,50.00)

DECLARE @Amt money = 0,

@AcumAmt money = 0

UPDATE t SET

@Amt = Amt = CASE WHEN @AcumAmt + Amt < MaxAmt THEN Amt

WHEN MaxAmt - @AcumAmt < 0 THEN 0

ELSE MaxAmt - @AcumAmt END,

@AcumAmt = @AcumAmt + Amt

FROM @tbl t

OPTION (MAXDOP 1)

SELECT *

FROM @tbl