Company: LGN
Filing Date: 2025-04-30
Form Type: DRS/A
Source: 0000950123-25-003868
Chunk: 271

Company: Legence Corp.
Filing Date: 2025-04-30
Form: DRS/A
Chunk 271
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 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 of various factors, including, but not limited to, dispute resolution developments and outcomes and
anticipated negotiation results.

For some transactions, customers may withhold a portion of the contract price as a contract retention until the project
is substantially complete or completed to ensure performance; however, these arrangements typically do not constitute a significant financing component.

4) Allocate the transaction price to the performance obligations

For contracts that contain multiple performance obligations, the transaction price is allocated to each performance obligation based on their estimated
relative standalone selling prices. The Company generally estimates standalone selling price using the expected costs plus a margin.

5) Recognize revenue as performance obligations are satisfied

The Company recognizes revenue when or as a performance obligation is satisfied, which occurs when
the customer obtains control of the good or service. This can occur over time or at a point in time.

The Company satisfies most performance obligations
over time because the Company’s performance typically either creates or enhances an asset the customer controls or because the customer simultaneously receives and consumes the benefit from the Company’s performance under the contract.

F-21

Confidential Treatment Requested by Legence Corp. Pursuant to 17 C.F.R. Section 200.83 Legence Holdings LLC and Subsidiaries Notes to Consolidated Financial Statements For most contracts, the Company measures progress using the input method (i.e., “Cost-to-CostInput Method”). Under the Cost-to-CostInput Method, costs incurred to date are generally the best depiction of transfer of control. For some contracts, the Company has historically used