Company: LGN
Filing Date: 2025-11-03
Form Type: DRS
Source: 0001193125-25-262782
Chunk: 264

Company: Legence Corp.
Filing Date: 2025-11-03
Form: DRS
Chunk 264
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 payment history when determining whether collection is
probable. The five-step model is applied as follows:

1) Identify the contract

Management determines if a contract exists using the following factors: (a) the parties have approved the contract and are committed to
perform their respective obligations, (b) the rights of the parties can be identified, (c) payment terms can be identified, (d) the arrangement has commercial substance, and (e) collectability of consideration is probable.

F-24

Confidential Treatment Requested by Legence Corp.

Pursuant to 17 C.F.R. Section 200.83

2) Identify performance obligations in the contract

A performance obligation is a contractual promise to transfer a distinct good or service. The Company applies judgment in determining whether
each promise or groups of promises are both (a) capable of being distinct and (b) distinct within the context of the contract. Most of the Company’s contracts are considered to have a single performance obligation because
(a) the Company provides a significant service of integrating complex tasks and components into a single project under the purview of the Company’s project management, and (b) the risks associated with the Company’s
performance, including customer acceptance clauses, warranty provisions, and liquidated damages, are tied to the overall project.

Contracts with customers are often modified through change orders that may impact the scope or price of the goods or services the Company is
providing. The Company evaluates change orders to determine whether they create separate performance obligations. Many change orders are for goods or services that are not distinct within the context of the original contract, and, therefore, are not
treated as separate performance obligations.

3) Determine the transaction price

The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring goods and
services to the customer. The consideration promised in a contract with customers may include fixed amounts, variable amounts, or both. After contract inception, the transaction price may change for various reasons, including executed or unresolved
change orders, executed or unresolved contract modifications, claims to or from the customer or owner, and back-charge recoveries. The customers may partially or fully agree with such modifications or affirmative claims. Most changes are considered
variable consideration until approved by both parties.

The Company estimates variable consideration, such as bonuses 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