Update statement, update value is conditionally evaluated - sql

Question

I have the below pseudo code written that I want to implement in T-SQL. I need this code included in an existing stored procedure, I was trying to achieve the below with function call passing in a temp table as a parameter, is it possible to pass a temp table as a function parameter. Please let me know if there is a better approach to this.
Table: #Temp_Table has a column RefId which refers to #TempReadUpdateValue.Id. There are rules to identify if the #TempReadUpdateValue.Id can be applied to #Temp_Table.RefId.
Rule 1: the data qualifies in the DateRange
Rule 2: the #TempReadUpdateValue.Id is available if (Allowed - Used) > 0.
Allowed is fixed value and used will increment as its assigned.
I want to achieve the above with an UPDATE statement on Temp_Table, the challenge that I face is #Temp_Table.RefId = #TempReadUpdateValue.Id, need to increment
#TempReadUpdateValue.Used = #TempReadUpdateValue.Used + #Temp_Table.Units
every next row in #Temp_Table need to re-evaluate rules #1 and #2 for RefId assignment.
Update statement:
DECLARE #OLD INT = 0; -- THIS CAN ALSO BE SET TO 1, basically passed in as param to the stored procedure.
CREATE TABLE #TempReadUpdateValue
(
Id INT,
From_Date DateTime,
Thru_Date DateTime,
Allowed int,
Used int
)
CREATE TABLE #Temp_Table
(
Pk_ID INT,
DOS DateTime,
Units Int,
Ref_Id int
)
UPDATE #Temp_Table
SET Ref_Id = CASE
WHEN #OLD = 0 THEN 121
ELSE NewImplementation(DOS, Units, #TempReadUpdateValue)
END
CREATE OR ALTER FUNCTION NewImplementation
(#DOS DATETIME, #Units INT, #TempReadUpdateValue)
RETURNS INT
AS
BEGIN
DECLARE #Id INT
DECLARE #Allowed INT
DECLARE #Used INT
SELECT
#Id = Id,
#Allowed = Allowed,
#Used = Used
FROM
#TempReadUpdateValue
DECLARE #ReturnValue INT = 0
IF (#Id > 0) AND (#Allowed - #Used ) > 0
BEGIN
#ReturnValue = #Id;
UPDATE #TempReadUpdateValue
SET Used = (Used + #Units);
END
RETURN #ReturnValue
END