How do I add a library project to Android Studio?

Question

How do I add a library project (such as Sherlock ABS) to Android Studio?

(Not to the old ADT Eclipse-based bundle, but to the new Android Studio.)

Answer 1

To add to the answer: If the IDE doesn't show any error, but when you try to compile, you get something like:

No resource found that matches the given name 'Theme.Sherlock.Light'

Your library project is probably compiled as an application project. To change this, go to:

Menu File -> Project structure -> Facets -> [Library name] -> Check "Library module".