Company: LGN
Filing Date: 2025-11-03
Form Type: DRS
Source: 0001193125-25-262782
Chunk: 136

Company: Legence Corp.
Filing Date: 2025-11-03
Form: DRS
Chunk 136
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 by Legence Corp.

Pursuant to 17 C.F.R. Section 200.83

Our significant accounting policies are discussed in the “Note 2—Summary of
Significant Accounting Policies” in the Notes to Consolidated Financial Statements and Notes to Condensed Consolidated Financial Statements. We believe that the accounting policies discussed below are critical to understanding our historical
and future performance, as these policies relate to areas involving a significant level of estimation uncertainty and have had or are likely to have a material impact on our financial statements.

Revenue Recognition

The Company
recognizes revenue at the time the related performance obligation is satisfied by transferring the promised good or service to its customers. A good or service is considered to be transferred when the customer obtains control. The Company can
transfer control of a good or service and satisfy its performance obligations either over time or at a point in time, though the majority of the Company’s contracts have over time performance obligations.

Management has concluded performance obligations related to construction and service contracts are satisfied over time because the
Company’s performance typically creates or enhances an asset that the customer controls. The Company primarily measures the progress toward complete satisfaction of the performance obligation(s) using an input method (i.e., “cost-to-cost”), though some contracts use an output method (i.e., “milestone achievement”) when our performance does not produce significant amounts
of work in process prior to complete satisfaction of such performance obligation(s).

The accuracy of the Company’s revenue and
profit recognition in each year at the balance sheet date depends on the accuracy of management’s estimates of the cost to complete each project as well as variable consideration. There are several factors that can contribute to changes in
estimates of contract cost and profitability, such as changes in project scope, input costs and productivity, among others. Such factors may cause fluctuations in gross profit and gross profit margin from period to period. These changes may have a
significant impact on the financial statements. At the time a loss on a contract becomes probable, the entire amount of the estimated loss is accrued. Management monitors for circumstances that may affect the accuracy of its estimates, and material
changes in estimates are disclosed accordingly.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of identifiable assets and liabilities of the acquired business.
Goodwill is not subject to amortization but is tested for impairment at the reporting unit level, which represents the operating segment level or one level below the operating segment level for which discrete information is available. Goodwill is
evaluated for