Please follow the below instructions.
In Preferences (CTRL + ,), in the General tab, click on Import Settings.
You need to select AAC Encoder in the Import Using drop down menu.
Now Create AAC Version should appear in your right-click context menu.
If the above steps don't work, please contact the manufacture.
Let us know if that helps.
Thank you Mohit. Very helpful. I am now able to create AAC versions of the music. However, I am still unable to add the music. I do as follows:
Click on + Add Music
Takes me to iTunes
I select the music (AAC version) (Blue Monk by Theloneous Monk)
Add Music Results Box pops up, with the following message:
Some music files could not be added
The music file is not well formed. (1)
1-01 Blue Monk 1.m4a
Tried different songs, different genres. Same result.
Now, I tried again and I get the same error message above but this time it says: 1-01 Blue Monk 3.mp3, suggesting the problem is not with iTunes.
I called Apple support. The kind gentleman did a screen share with me and there appeared to be no problem with iTunes. Seems my copies of LR and iTunes "not talking."