Company: LGN
Filing Date: 2025-11-03
Form Type: DRS
Source: 0001193125-25-262782
Chunk: 311

Company: Legence Corp.
Filing Date: 2025-11-03
Form: DRS
Chunk 311
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. While the adoption of Update 2023-09 will result in expansion of income tax disclosures, the Company does not expect it to impact the recognition
or measurement of income taxes upon adoption within its 2025 Annual Consolidated Financial Statements.

Compensation—Stock
Compensation—In March 2024, the FASB issued ASU 2024-01, “Compensation—Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards” (“Update 2024-01”). This update adds an illustrative example to demonstrate how an entity should apply the scope guidance to determine whether profits interest awards should be accounted for in accordance with ASC 718.
The Company adopted Update 2024-01 as of January 1, 2025 on a prospective basis, and the adoption did not have an impact on the accounting for profits interests awards, as the Company will continue to
account for profits interest awards under ASC 718.

Note 3—Revenue Recognition and Related Balance Sheet Accounts

Revenue is recognized when control of the promised goods or services is transferred to the customer, either at a
point-in-time or over-time, as the performance obligation is satisfied. The amount of revenue recognized reflects the transaction price, which is the consideration that
the Company expects to receive in exchange for those goods or services provided.

Most of the Company’s contracts are considered to
have a single performance obligation satisfied over time using the input method (i.e., “Cost-to-Cost Input Method”). For some contracts, the Company has
historically used an output method (i.e., milestone achievement). For the three months ended June 30, 2025 and 2024, revenue recognized under the output method represented 0.8% and 2.4% of revenues, respectively. For the six months ended
June 30, 2025 and 2024, revenue recognized under the output method represented 1.1% and 2.9% of revenues, respectively.

The
consideration promised in a contract with customers may include fixed amounts, variable amounts, or both. The Company estimates variable consideration and includes it 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. 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.