intellij with Android SDK : lambda expressions are not supported in -source 1.7

Good day all

I know there are various questions on this issue, and I have visited quite a number of them, however they do not provide any "solution".

The general answer is to set the Language level to 8 (Allowing for lambdas) as I have done for the 2 modules built with grade, see below

and

I would like to confirm that I have Java 8 install

java -version
java version "1.8.0_141"
Java(TM) SE Runtime Environment (build 1.8.0_141-b15)
Java HotSpot(TM) 64-Bit Server VM (build 25.141-b15, mixed mode)

When setting the Language level, it resolves the issue it has in the IDE,but when building my project to run on my devvice, I get this as an error:

Information:Gradle tasks [:app:assembleDebug]
/home/cybex/Documents/University/Year 5/Semester 2/WRAP302 - Advanced Programming 2/Assignments/Assignment1/Task1_SOS2/app/src/main/java/wrap302/nmu/task1_sos/SOSButton.java
Error:(15, 25) error: lambda expressions are not supported in -source 1.7
(use -source 8 or higher to enable lambda expressions)
/home/cybex/Documents/University/Year 5/Semester 2/WRAP302 - Advanced Programming 2/Assignments/Assignment1/Task1_SOS2/app/src/main/java/wrap302/nmu/task1_sos/MainActivity.java
Error:(85, 34) error: lambda expressions are not supported in -source 1.7
(use -source 8 or higher to enable lambda expressions)
Error:Execution failed for task ':app:compileDebugJavaWithJavac'.
> Compilation failed; see the compiler error output for details.
Information:BUILD FAILED
Information:Total time: 1.054 secs
Information:3 errors
Information:0 warnings
Information:See complete output in console

Any thoughts?

UPDATE

For those suggesting it may be Gradle issues:

Project Gradle build

<?xml version="1.0" encoding="UTF-8"?>
<module external.linked.project.id="Task1_SOS2" external.linked.project.path="$MODULE_DIR$" external.root.project.path="$MODULE_DIR$" external.system.id="GRADLE" type="JAVA_MODULE" version="4">
  <component name="FacetManager">
    <facet type="java-gradle" name="Java-Gradle">
      <configuration>
        <option name="BUILD_FOLDER_PATH" value="$MODULE_DIR$/build" />
        <option name="BUILDABLE" value="false" />
      </configuration>
    </facet>
  </component>
  <component name="NewModuleRootManager" LANGUAGE_LEVEL="JDK_1_7" inherit-compiler-output="true">
    <exclude-output />
    <content url="file://$MODULE_DIR$">
      <excludeFolder url="file://$MODULE_DIR$/.gradle" />
    </content>
    <orderEntry type="inheritedJdk" />
    <orderEntry type="sourceFolder" forTests="false" />
  </component>
</module>

Module Gradle build

apply plugin: 'com.android.application'

android {
    compileSdkVersion 26
    buildToolsVersion "26.0.1"
    defaultConfig {
        applicationId "wrap302.nmu.task1_sos"
        minSdkVersion 15
        targetSdkVersion 26
        versionCode 1
        versionName "1.0"
        testInstrumentationRunner "android.support.test.runner.AndroidJUnitRunner"
    }
    buildTypes {
        release {
            minifyEnabled false
            proguardFiles getDefaultProguardFile('proguard-android.txt'), 'proguard-rules.pro'
        }
    }
}

dependencies {
    compile fileTree(include: ['*.jar'], dir: 'libs')
    androidTestCompile('com.android.support.test.espresso:espresso-core:2.2.2', {
        exclude group: 'com.android.support', module: 'support-annotations'
    })
    compile 'com.android.support:appcompat-v7:26.0.0-alpha1'
    compile 'com.android.support.constraint:constraint-layout:1.0.2'
    testCompile 'junit:junit:4.12'
    compile 'com.android.support:gridlayout-v7:26.0.0-alpha1'
}

To those suggesting that I need to change my project language 8 (from 7), I have done so already (reeason for images as proof), yet my error persists, hence the reason for my question unless I am missing something in plain site.

Side question: something of concern, each time I change an the language level to 8, followed by a gradle change (i.e. added dependency, etc), the language level defaults to 7, is this normal?