Company: LGN
Filing Date: 2025-08-15
Form Type: S-1
Source: 0001193125-25-181698
Chunk: 156

Company: Legence Corp.
Filing Date: 2025-08-15
Form: S-1
Chunk 156
---
impairment was primarily driven by a decline in projected cash flows due to lower revenue projections and investments in support functions. During the year ended December 31, 2022, it was determined the carrying amount of goodwill for two
reporting units in the Installation & Maintenance segment exceeded fair value, resulting in goodwill impairment charges of $23.4 million. The impairment was primarily driven by a decline in projected cash flows due to lower revenue
projections, investments in support functions and increased cost of capital due to rising interest rates.

112

There are inherent uncertainties related to these factors and management’s judgment in
applying them to the analysis of goodwill impairment. It is possible that changes in facts, judgments and assumptions made in estimating the fair value of reporting units could occur, resulting in possible impairment in the future.

Income Taxes

We utilize the asset
and liability approach in reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts
in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount that is more
likely than not to be realized.

Under the provisions of ASC 740-10 Income Taxes, the Company
evaluates uncertain tax positions by reviewing against applicable tax law all positions taken by the Company with respect to tax years for which the statute of limitations is still open. ASC 740-10 provides
that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical
merits.

Refer to “Note 2—Summary of Significant Accounting Policies” and “Note 15—Income Taxes” in
the Notes to Consolidated Financial Statements and “Note 2—Summary of Significant Accounting Policies” and “Note 11—Income Taxes” in the Notes to Condensed Consolidated Financial Statements for further
information, including the identification and measurement of deferred tax assets and liabilities, the measurement of valuation allowances on deferred tax assets, gross unrecognized tax benefits and other additional acquired tax attributes.

Acquisitions and Valuation of Intangible Assets

We assign purchase consideration to the assets acquired and liabilities assumed as of their acquisition dates based on their fair value. We
record our acquisitions under the acquisition method of accounting, and the total purchase price is