Company: LGN
Filing Date: 2025-08-15
Form Type: S-1
Source: 0001193125-25-181698
Chunk: 283

Company: Legence Corp.
Filing Date: 2025-08-15
Form: S-1
Chunk 283
---
 The amount of revenue recognized reflects the consideration that the Company expects to receive in exchange for those goods or services
provided. The Company transacts with customers that management believes are credit worthy, and management considers historical customer practices and 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.

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

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,