SQL Server 2017

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create table table2
(
   date smalldatetime,
   item char(1),
   [time] int,
   amount int
   ,new char(1) -- for new row flag 
)

INSERT INTO table2 (date,item,time,amount,new) VALUES 
 ('1/1/2000','a',1,100,'N'),
 ('1/1/2000','a',2,100,'N'),
 ('1/1/2000','a',3,200,'N'),
 ('1/1/2000','a',4,NULL,'Y'),
 ('1/1/2000','a',5,NULL,'Y'),
 ('1/1/2000','a',6,300,'N'),
 ('1/1/2000','b',1,100,'N'),
 ('1/1/2000','b',2,100,'N'),
 ('1/1/2000','b',3,NULL,'Y'),
 ('1/1/2000','b',4,NULL,'Y'),
 ('1/1/2000','b',5,200,'N'),
 ('2/1/2000','a',1,500,'N'),
 ('2/1/2000','a',2,500,'N'),
 ('2/1/2000','a',3,NULL,'Y'),
 ('2/1/2000','a',4,550,'N');
15 rows affected

update t
set amount = (
  select amount from table2 
  where
  date = t.date and item = t.item and time = (
    select max(time) from table2
    where 
    date = t.date and item = t.item and time < t.time and amount is not null and new = 'N'
  ) 
)
from table2 t
where t.amount is null and t.new = 'Y'
5 rows affected

select * from table2


date
item
time
amount
new


2000-01-01 00:00
a
1
100
N

2000-01-01 00:00
a
2
100
N

2000-01-01 00:00
a
3
200
N

2000-01-01 00:00
a
4
200
Y

2000-01-01 00:00
a
5
200
Y

2000-01-01 00:00
a
6
300
N

2000-01-01 00:00
b
1
100
N

2000-01-01 00:00
b
2
100
N

2000-01-01 00:00
b
3
100
Y

2000-01-01 00:00
b
4
100
Y

2000-01-01 00:00
b
5
200
N

2000-02-01 00:00
a
1
500
N

2000-02-01 00:00
a
2
500
N

2000-02-01 00:00
a
3
500
Y

2000-02-01 00:00
a
4
550
N

date	item	time	amount	new
2000-01-01 00:00	a	1	100	N
2000-01-01 00:00	a	2	100	N
2000-01-01 00:00	a	3	200	N
2000-01-01 00:00	a	4	200	Y
2000-01-01 00:00	a	5	200	Y
2000-01-01 00:00	a	6	300	N
2000-01-01 00:00	b	1	100	N
2000-01-01 00:00	b	2	100	N
2000-01-01 00:00	b	3	100	Y
2000-01-01 00:00	b	4	100	Y
2000-01-01 00:00	b	5	200	N
2000-02-01 00:00	a	1	500	N
2000-02-01 00:00	a	2	500	N
2000-02-01 00:00	a	3	500	Y
2000-02-01 00:00	a	4	550	N