Company: LGN
Filing Date: 2025-12-09
Form Type: S-1
Source: 0001193125-25-312729
Chunk: 317

Company: Legence Corp.
Filing Date: 2025-12-09
Form: S-1
Chunk 317
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 or penalties, and
includes these considerations in the transaction price to the extent it is probable that a significant future reversal in the amount of cumulative revenue recognized under the contract will not occur when the uncertainty associated with the variable
consideration is resolved. This threshold is referred to as the variable consideration constraint. In assessing whether to apply a variable consideration constraint, the Company considers if factors exist that could increase the likelihood or
magnitude of a potential reversal of revenue, including, but not limited to, whether: (a) the amount of consideration is highly susceptible to factors outside of the Company’s influence, such as the actions of third parties, (b) the
uncertainty surrounding the amount of consideration is not expected to be resolved for a long period of time, and (c) the Company’s experience with similar types of contracts is limited or that experience has limited predictive value.

Management reassesses the amount of variable consideration each reporting period, and changes to estimated variable consideration are
accounted for as a cumulative adjustment to revenue recognized in the current period. Recognizing changes in the transaction price requires significant judgments of various factors, including, but not limited to, dispute resolution developments and
outcomes and anticipated negotiation results.

For some transactions, customers may withhold a portion of the contract price as a contract
retention until the project is substantially complete or completed to ensure performance; however, these arrangements typically do not constitute a significant financing component.

4) Allocate the transaction price to the performance obligations

For contracts that contain multiple performance obligations, the transaction price is allocated to each performance obligation based on their
estimated relative standalone selling prices. The Company generally estimates standalone selling price using the expected costs plus a margin.

5) Recognize revenue as performance obligations are satisfied

The Company recognizes revenue when or as a performance obligation is
satisfied, which occurs when the customer obtains control of the good or service. This can occur over time or at a point in time.

F-64

The Company satisfies most performance obligations over time because the Company’s performance typically either creates or enhances an asset the customer controls or because the customer simultaneously receives and consumes the benefit from the Company’s performance under the contract. For most contracts, the Company measures progress using the input method (i.e., “Cost-to-CostInput Method”). Under the Cost-to-CostInput Method, costs incurred to date are generally the best depiction of transfer of control. For some contracts, the Company has historically used an output method (i.e., milestone achievement), where an output method provides the most reliable information