Company: LGN
Filing Date: 2025-08-25
Form Type: S-1/A
Source: 0001193125-25-186788
Chunk: 287

Company: Legence Corp.
Filing Date: 2025-08-25
Form: S-1/A
Chunk 287
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 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

F-25

Legence Holdings LLC and Subsidiaries

Notes to Consolidated Financial Statements

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 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