Go to the project navigator from the left pane and click on Assets. In the middle pane, you will see the current assets are loaded. (There are no assets in your project yet). Click on AppIcon; you will see an empty canvas for a 1024x1024 image. Double-click on that, and select the icon from your files. Now your App Icon is set.
Now, run the app again.
Now, go to the app drawer of the emulator. You will see that the icon for our 'App1' is set.